Orders of new aircraft helped fuel growth in the economy in the first quarter of 2007, figures published by the Central Statistics Office (CSO) yesterday show.
But economists warned that the purchase of the aircraft would prove to be a one-off boost to the economy and that lower levels of activity in the housing sector would drag down investment growth as the year goes on.
The economy grew at a rate of 7.5 per cent in the first three months of the year, according to the quarterly national accounts.
The strong year-on-year growth in Gross Domestic Product (GDP), the traditional measure of economic output, was driven by domestic demand.
The new aircraft orders gave spending on machinery and equipment a significant boost, leading to a 13.3 per cent increase in capital formation.
Housing output was flat, growing by just 0.6 per cent year-on-year, while the overall construction sector grew 3.7 per cent, the figures show.
The non-residential property sector is helping to offset "virtually stagnant" house building, Davy Stockbrokers commented.
Davy said the effects of the slowdown in the housing market would be felt later in the year, while Goodbody Stockbrokers said the growth figures for the remainder of the year were unlikely to be as high as they were in the first quarter.
The Irish Business and Employers Confederation (Ibec) welcomed a recovery in the traded sectors, with manufacturing and exports both performing well.
Exports grew by an annual rate of 7.8 per cent in the first quarter, while economic output from industry is growing at a rate of 14.4 per cent.
The CSO yesterday revised its figure for GDP growth, saying the economy grew by 5.7 per cent rather than its original end-of- year estimate of 6 per cent.
The national income and expenditure figures for 2006 showed greater output in financial services and higher spending on health with net exports largely unchanged.
Analysts stuck with their forecasts for 2007 yesterday, with Bank of Ireland chief economist Dan McLaughlin predicting GDP growth of 6 per cent this year and 5 per cent in 2008.
The Economic and Social Research Institute (ESRI) said on Monday that GDP would slow to 4.9 per cent this year and 3.7 per cent in 2008.
