Unemployment rate down two percentage points by end 2016
Positive outlook for export sector and domestic activity
Bank of Ireland’s latest Quarterly Economic Outlook for the Irish economy re-affirms its headline growth forecasts for 2015 with a 4.2% increase in GDP and GNP to increase by 3.7%. Better unemployment data for end 2014 and into 2015 has led to a revision of its unemployment forecast for this year, with the rate now averaging 9.7% (compared with 10% in February’s Outlook) and finishing the year at close to 9%. By end 2016, unemployment is expected to be around the 8% mark.
Commenting Loretta O’Sullivan, Group Chief Economist, Bank of Ireland said: “With all stages of the recovery – exports, investment, employment and consumer spending - on track, the outlook is positive and solid growth is expected again in 2016. On the export front, trading partner growth and the weaker euro will provide support, while the recovering property market and stronger domestic economy should benefit investment. Importantly, consumer spending is set to gather pace on the back of further job gains and improving incomes. Inflation is expected to remain fairly subdued though.
“Exports experienced their biggest annual gain in years in 2014, increasing by 12.6% and making a healthy contribution to GDP growth. While exports should continue to rise, growth will be more in line with trading partner demand. Order books for both manufacturing and services are healthy (with the UK a key source of demand), and with good growth prospects for our trading partners and favourable exchange rate movements, continued gains are expected. We are forecasting export growth of over 5% this year and next.
“Investment grew by 11.3% last year and double digit growth is on the cards again this year, with machinery and equipment performing well and the revival in the construction sector ongoing. On the latter, there is demand for both residential and commercial property and residential building has picked up with 11,000 units completed last year. “Consumer spending rose by 1.1% last year and early data point to a further strengthening this year. New car sales, for example, were up over 30% year-on-year in the first quarter of 2015 and are on course to top 100,000 for the year as a whole. Spending growth is forecast to increase by 2.1% this year supported by continued employment and income growth before picking up further to 2.3% next year. This represents a modest increase over our February forecasts”, concluded Loretta O’Sullivan.
Related Document: Download: 23-04-15-quarterly-economic-outlook.pdf - 496 KB