Thursday, October 8th – The latest Quarterly Economic Outlook from Bank of Ireland points to continued strong GDP growth, growth in employment, a buoyant export sector, and a rise in consumer spending.
The Bank of Ireland Chief Economist, Dr Loretta O’Sullivan, has revised her 2015 headline GDP and GNP forecasts upwards by just under one percentage point to 6.2% and 5.8% respectively. The outlook for 2016 also remains bright with the GDP forecast for next year unchanged at a still strong 4.8%.
The Quarterly Economic Outlook points to strong consumer spending, with car sales in the first 9 months of 2015, up 31.7% on the same period in 2014 and retail sales (excluding cars) also strong at 7.6% year-on-year in August. Further employment and income gains will support spending which is forecast to increase by 3.2% both this year and next.
Recent data, including healthy order books, suggest that exports will continue to perform well in the second half of the year. Growth of 12.0% is now forecast for this year (9.0% in Bank of Ireland’s previous outlook), followed by a more modest but still healthy 6.5% next year. Looking ahead, the improving domestic economy is expected to support employment gains in the region of 2.7% this year and 2.4% in 2016. The unemployment rate is forecast to fall to close to 9% by year end and approximately 8% by the end of next year.
Activity in the residential housing sector continues apace with transactions up 30% in the first 7 months of the year, while the volume of mortgages for house purchase increased by almost 44% year-on-year in the first half. The annual pace of house price gains has eased since the turn of the year, possibly impacted in part by the Central Bank's new macro-prudential rules. However, demand remains strong with higher employment, incomes and demographics continuing to support activity.
Discussing the latest Quarterly Outlook, Dr Loretta O’Sullivan, Chief Economist, Bank of Ireland said: “The outlook for 2016 remains bright, and we are leaving our GDP forecast for next year unchanged at a strong 4.8%. The public finances are in good shape ahead of Budget 2016, which the Government has signalled will provide for a tax reduction/spending increase package of between €1.2 and €1.5 billion. With unemployment falling and improving consumer spending - which has risen for 6 consecutive quarters – there are further positive signals of continued growth.”