Irish GDP to grow 5.3pc this year and 4.8pc in 2015 – BoI forecast

Ireland’s GDP is set to increase by 5.3pc this year and by 4.8pc in 2016, according to Bank of Ireland’s latest quarterly economic outlook.

GNP, meanwhile, is set to grow by 5pc in 2015 and 4.6pc next year.

The bank has revised upwards both forecasts by 0.1 percentage point for this year and next.  

It said strong national accounts data for the first quarter of 2015 and positive signals from high frequency indicators point to continuing momentum and solid growth again this year.

 “The economic data flow in recent months has been encouraging as we continue to see a broadening out of the recovery, with domestic activity – especially consumer spending – firming and contributing to growth along with net exports,” said Bank of Ireland’s group chief economist, Loretta O’Sullivan. 

“Tailwinds including favourable exchange rate movements and external demand, as well as further employment gains and high confidence levels, will continue to provide support; albeit ongoing deleveraging remains a headwind.  With the economy growing solidly, a decline in the unemployment rate to around 8pc is expected by the end of 2016.  Inflation on the other hand should stay fairly subdued.

“Exports look set to register strong growth again this year,” she said.  “The depreciation of the euro against sterling and the dollar is providing support to firms exporting to the UK and US, while the recovery in the euro area – Ireland’s other main trading partner – is gaining ground.

“Investment rose by over 14pc in 2014 and we expect to see double digit growth this year also.  Total investment is projected to rise by 10pc in 2015 and by 7.5pc in 2016.

“Consumer spending last year was better than initially estimated by the CSO and has continued to improve this year. Looking ahead, rising employment and earnings, along with subdued inflation, auger well for household incomes and spending prospects.  Consumer spending is forecast to increase by 3.2pc both this year and next, an upward revision that reflects the good data we are seeing.”

O’Sullivan also noted that the recovery in the residential property market is continuing.  “Transactions in the first half of the year were up over 30pc on the same period last year with the volume of mortgages for house purchase increasing by 64pc year-on-year in quarter one.  Prices are also rising, though the annual rate of growth has started to ease back a bit.  With supply only gradually increasing to meet demand, house price gains are expected again this year, albeit at a more moderate pace than last year.” 

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