Strong population growth will underpin Ireland's strong economic growth over the next 20 years as the rest of the EU tackles the problem of ageing populations, according to the latest research from Goodbody stockbrokers.
Goodbodys believes that Ireland has entered a second sharp growth phase and could enjoy average growth rates of 4.5 per cent over the next decade.
"For this trend growth to be achieved, inward migration will play a vitally important role," writes Goodbody's economist Dermot O'Leary.
He estimates that the economy will need net immigration of at least 30,000 per annum over the next decade to meet the demand for workers in an increasingly tight labour market.
The effects of ageing in Ireland will be minor as the country enjoys a younger age profile and higher birth rate that the rest of the EU.
Ageing populations will strain public finances across the world in the form of higher public pension liabilities and increased health costs.
"While the situation in Ireland will also deteriorate over the longer-term, the fiscal consequences are minor," according to the Goodbody report.
By 2050, the EU's Ageing Working Group estimates that age-related spending will increase to 13.2 per cent of GDP in Ireland, relative to an average of 27.7 per cent of GDP in the other 14 countries of the EU-15.
The Irish population is forecast to grow by 23 per cent over the next 20 years to reach 5.6 million, relative to less than 3 per cent in the EU-15. The demographic advantage also applies to the age profile of the economy, with the median age in Ireland standing at 34, relative to an EU-15 average of 40.
Goodbodys are forecasting that 2005 will be another record year for the construction industry with over 80,000 house completions. This rate of activity, which is four times the EU average, will moderate in the years ahead, according to the analysis.
Goodbodys also adhere to the "soft-landing" scenario for the property market as demand and supply reach an orderly balance.