Central Bank raises 2015 GDP forecast to 5.8 percent from 4.1percent
Ireland’s economic recovery accelerated in the first-half, expanding from the export sector to the domestic economy, prompting the Central Bank to revise its GDP forecast for 2015 up to 5.8 percent from 4.1 percent.
In its quarterly bulletin, the bank said its expects gross domestic product (GDP) to rise by 4.7 per cent next year, up from its previous forecast of 4.2 per cent. It expects gross national product (GNP), which excludes the contribution of multinationals, to expand by 5.3 per cent in 2015 and 4.4 per cent in 2016.
“A much stronger impetus from domestic demand is now anticipated for 2015 following the expansion in consumption and investment in the first half of the year,” the bank said.
Domestic demand grew by 8.4 per cent in the first half of the year, the fastest rate of growth since 2006, the report said. It is expected to continue to expand, growing by 5.6 per cent and five per cent in 2015 and 2016 respectively.
The jobs market should also continue to improve, with employment rising by 2.3 per cent increase this year and next. This should see the unemployment rate averaging 9.5 per cent in 2015 before declining to 8.5 per cent in 2016, the bank said.
“Ensuring that the recovery transitions to a sustainable pace of steady growth is the key challenge for policy in the period ahead,” the bank said.
It also warned that the burden of public debt remains high.
“Taking advantage of strong growth to lower it more quickly would reduce the vulnerability of the public finances and the economy more generally to future adverse shocks,” the report said.
It also warned against returning to the pro-cyclical fiscal policies of the past and cautioned about the danger of “using windfall fiscal gains to finance long-lasting spending commitments”.
