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Ibec predicts GDP growth of 6.1% for this year

Ibec, the group that represents Irish business, today published its new Quarterly Economic Outlook which is forecasting GDP growth to reach 6.1% on the back of a broad-based recovery in the economy, which includes a 1.5% increase in consumer spending, a 14.2% increase in investment and a 12.2% increase in exports this year.

According to Ibec, there is no need for the Government to do an austerity budget as the level of growth in the economy will reduce the fiscal deficit down to 2.5%,

In the Q3 Economic Outlook, Ibec also raised its 2015 GDP growth forecast to 4.5% (up from 3.9%), and this year’s GNP growth forecast to 5.4% (up from 2.5%).

Key issues highlighted in the forecast include:

  • Imports and exports: Exports will grow by over 12% this year, the strongest growth since 2000. Imports, however, will also grow strongly by 11% and the resulting net exports will contribute 3.5% to GDP growth, by far the largest contribution to growth.
  • Investment: Ibec’s business sentiment index remains high and indicates that companies’ confidence in the recovery is strong. Therefore, we expect strong investment growth this year and next (14.3% and 13.8% respectively).
  • Consumer spending: Increased job creation and a reduction in the budget adjustment will mean disposable income will increase by around 3% next year. On the back of this we expect consumer spending to rise by 1.5% this year and 2.9% in 2015.
  • Employment: There has been a slowdown in overall year-on-year employment growth compared with the second half of last year (from +3.2% to +2%); but these figures are still the strongest in the EU. The quality of employment growth has also been better as more new roles are full-time rather than part-time. We expect the number at work to return to early 2009 levels by the end of 2015.

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