IBEC Still Upbeat On Irish Growth Prospects
Despite cutting their 2013 forecast for Irish GDP growth by half a percentage point, IBEC remain upbeat in their latest economic assessment (report) and alongside the ESRI, are at the optimistic end of the outlook spectrum. However, the IMF have recently reduced their forecast for Ireland by almost a full percentage point (IMF Summary)
Over the last four months, growth expectations for the Irish economy have been pared back by most economic forecasters.
Given that 50% of the Irish economy is dependent upon Consumption, a key assumption about improving growth is largely dependent upon the consumer, and in particular both the value and volume of retail sales. IBEC do note the recent drop in the KBC/ESRI consumer sentiment index in December, suggesting that a stabilisation in employment and comparatively low inflation (CPI estimate at +1.5% for 2013) will result in zero growth in private consumption for the year as a whole.
With Irish retail sales, in inflation-adjusted terms, back to 1998 levels (see chart below), plus with no expansion for 2013 predicted , the question remains as to precisely where IBEC see growth emanating from (apart from the obvious export-oriented 'Modern Sector').
Their upbeat economic vista is predicated upon a +10% rise in Investment, specifically Plant & Machinery. Additionally, they foresee a modest uptick in construction sector activity of approximately +2.3%, led largely by home improvements with new home building activity expected to remain at depressed levels. Whether or not 2013 represents a major turning point for the Irish economy remains to be seen, but at leasttheir optimism is encouraging.
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Posted in Business Other Post Date 01/04/2015