RTTNews - Ireland's economy is likely to contract 8.3% this year, central bank governor John Hurley said Tuesday. However, the pace of contraction is likely to slow to around 3% next year with some gradual recovery emerging later in the year but unlikely to take hold until 2011.

Launching the central bank's annual report, Hurley told reporters that the contraction in activity has already led to a significant rise in unemployment, which will not begin to reverse until the recovery gains some momentum. Unemployment is forecast to average around 13% this year and 15% in 2010.

The consumer price index is forecast to fall by around 4% this year and to be broadly flat next year. The harmonized consumer price index, which does not include mortgage interest payments, is projected to fall by close to 1.5% this year with a further modest fall in 2010.

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