CHARLIE TAYLOR
The economy will grow by 5 per cent in GDP terms this year, according to a revised forecast from Bank of Ireland.
This compares to a previous forecast of 2.8 per cent growth issued in July.
The bank also forecasts growth of 4.2 per cent for 2015, up from 3.4 per cent previously and reflecting in part the changed fiscal stance with Budget 2015 providing for a €1billion stimulus.
“News on the economic front has been positive through 2014, with headline measures of activity for the first and second quarters, and high-frequency data for the third, confirming that the economy is strengthening. The data also show that the recovery has broadened out, with domestic demand now contributing to growth along with exports. This was expected and is in line with the recovery path that Ireland has been following for some time,” said Loretta O’Sullivan, group chief economist at Bank of Ireland.
“The scale of the improvement has surprised on the upside. GDP increased by 3.8 per cent year-on-year in the first quarter, with the pace of growth picking up to 7.7 per cent in the second. While the latter likely overstates the underlying strength of the economy, it points to strong momentum and a recovery that is gaining ground,” she added.
Export growth also accelerated over the first half of 2014, according to Bank of Ireland. Goods exports were some 13 per cent higher year-on-year. At 7 per cent, the annual increase in services exports was in line with the rate of growth recorded for the whole of last year. Bank of Ireland predicts export growth of 7.5 per cent for this year and 5.5 per cent for 2014.
It said that inflation is likely to remain low into 2015 with both CPI and HICP inflation to average 0.5 per cent this year, increasing to 1.3 per cent in 2015.
The bank said it expectes investment growth of 12 per cent for 2014 and 2015. Consumer spending will likely rise by 2 per cent in 2015, the bank said.
In addition, BoI expects unemployment will fall to 10 per cent next year, from just over 11 per cent in 2014.
