Irish Economy 2014: The Economic and Social Research Institute (ESRI) says economic growth is expected to be strong in 2014 and 2015, with Ireland's gross national product (GNP) forecast to grow by approximately 5% in each year.
In the Quarterly Economic Commentary, Autumn 2014, published today, the ESRI forecasts growth in GNP of 4.9% in 2014 and of 5.2% in 2014. Declines in unemployment are also forecast, with the headline rate envisaged to fall to 9.6% in 2015.
Speaking about the report, David Duffy of the ESRI said “The recovery in Ireland is broad-based and is stronger than previously thought. We have revised our forecasts upwards based on strong growth figures in the first half of 2014, better than expected performance in the net trade sector, a pick-up in investment levels and strong budgetary receipts. In our view, GNP continues to provide the best measure of the standard of living (and output) of Irish residents.”
The institute says a fiscally neutral budget would produce a deficit of 2.1% of GDP in 2015.
€500m in additional revenue is expected to be raised in 2015, with about €400m from water charges.
Under a fiscal neutrality scenario, this would be available to the government for a consumption or investment package.
"We recommend adopting an investment strategy with targets an increase in the number of social housing units. This would help to consolidate growth while also tackling one of the most pressing economic and social policy concerns at this point, namely, the supply-side of the residential property market.”
Export volumes are forecast to grow by 5.6 and 6% in 2014 and 2015. "Given the improvement in the domestic economy, demand is forecast to grow by 3.7% in 2014 and by 4% in 2015. These growth rates follow six years of contraction in domestic demand. On the back of this, growth of 4.9% is forecast for GNP in 2014 and 5.2% in 2015."
GDP will grow by 5% in 2014 and 5.3% in 2015.
The institute has revised upward its level of housing completions for both 2014 and 2015 to 11,500 and 18,000 respectively. However, it says that a key factor in determining the level of housing completions will be the availability of credit. In addition, while these forecasts suggest that supply will increase, the
level of completions remains somewhat below the level of expected new house formation of approximately 25,000 new households per annum - - which why it is also advocating investment in social housing.
The volume of overall investment is expected to grow by over 14% in 2014 and by close to 13% in 2015.
Irish Economy: ESRI notes GNP and trade data uncertainties / distortions in national accounts
The idiot/ eejit's guide to distorted Irish national economic data