, which is less than the anticipated growth in the labour force and, therefore, the unemployment rate could increase to 5. 9 per cent. despite the projected increase, our unemployment rate is expected to remain below the european average. it may be worth recalling that the labour market proved particularly resilient to the last significant downturn in economic growth in 2001 / 2002. some pick up in economic growth is likely in 2009 on the basis that house - building activity will stabilise or contract only modestly, and there will be some recovery in the global economy. at this stage, growth in irish gdp and gnp are forecast to recover to 3. 6 per cent and 3. 2 per cent, respectively, in 2009. property prices and private - sector indebtedness i would now like to turn to recent developments in the property market – both residential and commercial. we have come through a buoyant period in the residential market. in previous years, the central bank expressed its concern about the persistently high rate of capital appreciation. however, residential prices are now about 9 per cent lower than this time last year, although there are tentative indications that the pace of decline in prices has eased somewhat. it is important to bear in mind that these developments should be seen as part of a necessary adjustment following many years of exceptional house price inflation. for instance, prices rose by about 12 per cent in 2006 alone and by over 50 per cent between 2002 and 2006. with respect to future price developments, as i stated recently, residential prices are now returning to more realistic levels. i stated in 2006 that, at that time, a gap was opening up between the price of residential property and the fundamentals supporting that position. this gap is now in the process of closing. there are a number of factors that may help to stabilise the market. on the supply side, developers have been very prompt in responding to declining demand and we have seen national completions contract sharply. the underlying demand for housing continues to remain strong, as evidenced by the fact that rents are continuing to grow strongly ( about 9 per cent per annum ), although there is recent evidence of some softening in rental growth. affordability has begun to improve again due to lower house prices and changes to stamp duty and mortgage interest relief. the combination of higher rents and improvements in affordability may already be bringing the relative costs of buying and renting closer, helping to re - establish equilibrium in the market. there are, of course

outlined in the last review to increase the countercyclical capital buffer to 1. 5 per cent. this leaves us at the rate set out in our macroprudential strategy last june, above or below which we will move when we deem that cyclical risks are either particularly elevated, or particularly subdued. we are publishing an accompanying document today that sets out the factors that will guide our judgment in ongoing quarterly assessments for this capital buffer. capital buffers form part of our three - pillar approach to macroprudential policy, along with the mortgage measures and our tools to address systemic risks among non - bank financial intermediaries. on the mortgage measures, we are only beginning to see how the changes made to our framework late last year are operating in the context of broader mortgage and housing market developments. our aim in making those changes was to more finely balance the financial stability benefits of these tools with the costs that they can impose. we will continue to carry out detailed research and analysis on the measures and their effects in the market, as well as deepening the way in which we assess the costs and benefits of our current calibration. as for non - bank finance, the phased introduction of macroprudential measures for irish property funds last year, including a leverage limit and liquidity guidance, was a key milestone in our attempts to broaden the macroprudential toolkit to address sources of systemic risk in this segment of the financial system. given the international nature of the non - bank financial sector in ireland, we continue to work with international partners 2 / 3 bis - central bankers'speeches to develop and operationalise the macroprudential framework for the sector, including the investment fund sector. to further advance global discussion and progress in this area, we will be publishing a discussion paper on an approach to macroprudential policy for funds in the coming weeks and will be seeking feedback in the months ahead. our work programme on non - bank finance and macroprudential policy will be covered in more detail next month when we publish the discussion paper. thank you all for joining us this morning. we are now available to take your questions. 3 / 3 bis - central bankers'speeches