Irish income per capita at 2007 peak; Planning permissions at 1970s low
The Economic and Social Research Institute says in its latest economic commentary that Irish income per capita in 2015 is back at its 2007 peak and it calls on the Government to abandon plans for a pre-election giveaway — this time if there is an economic stumble it wants to ensure that it will not be accused of being a cheerleader. Meanwhile house planning permissions in teh first half of this year have been teh the lowest since the 1970s.
The strong economic growth currently being observed is expected to continue into 2016, with Ireland's gross domestic product (GDP) forecast to grow by approximately 6% in 2015 and 4.5% in 2016, according to the latest analysis by researchers at the Economic and Social Research Institute (ESRI).
In recent times the institute had stressed the GNP (gross national product) metric, which excludes the profits of the multinational exporting sector, but it has reverted to using GDP as GNP is also heavily distorted.
In the Quarterly Economic Commentary, Autumn 2015, published today, researchers predict a growth in GDP of 6% in 2015 and of 4.5% in 2016. Declines in unemployment are also expected, with the headline rate envisaged to fall to 8.1% by the end of 2016.
Speaking about the report, Dr Kieran McQuinn (ESRI) said “We believe the pace of growth has accelerated in the economy and we now forecast an increase in GDP of 6% this year and 4.5% in 2016. A notable feature of economic performance this year has been the increase observed in personal consumption indicating that households are finally beginning to experience the recovery.”
Co-editor Dr David Duffy (ESRI) said that “In our view the increase in the pace of economic growth reinforces the case for a neutral budget this year. As the economy is now growing strongly, we do not see any macroeconomic rationale for stimulating further the level of economic activity.”
The Government plans tax cuts and current spending rises of at least €1.5bn when the 2016 Budget will be announced on 13 Oct.
The economists say that: "the robust growth rates experienced by the economy, we believe, argue for a policy which does not stimulate economic activity in the forthcoming budget. In framing budgetary policy, it is important to heed the lessons of the past and, consequently, avoid pro-cyclical policy options."
The ESRI forecasts a budget deficit this year of 1.8% of GDP and 1.2% of GDP in 2016.
Total investment in building and construction is forecast to increase by 16.3% in volume and by 21% in value this year — with commercial property in the lead. "Reflecting the higher base from which it will be measured, a marginally slower rate of volume growth of 13% is forecast for 2016. It is also worth observing that even though there has been some increase in the rate of planning permissions for new dwellings in the first half of the year, this figure is at its lowest level since the series started to be compiled in the late 1970s."
Income per capita back to 2007 levels does not mean people have the same average disposable income.