'Economy to boom for 15 years'

NCB Stockbrokers says the implications for the economy generally are extremely bullish based on the population projections out to 2020.

The reports identifies the baby boomers of the 1970s and early 1980s as uniquely important to the ongoing solid outlook.

Between 1971 and 1983 over 900,000 people were born in Ireland, with the annual number of births averaging almost 70,000.

That was the highest sustained annual number since the foundation of the state. It peaked at over 74,000 in 1980, the highest number since 1922. Between 1922 and 1972 the average was significantly lower at 61,000.

This sharp rise was the trigger that has led us to where we are now, according to the just-published "2020 Vision - Ireland's Demographic Dividend".

Those baby boomers now number 895,000 and are aged between 22 and 34; for the next 40 years they will account for the bulk of the buoyancy in the economy.

Dermot O'Brien, chief economist with the stockbrokers, said the research builds on NCB's "Population and Prosperity, Sustaining the Boom" carried out in 1998.

That review argued that the economy, because of its emerging population base, had the capacity to grow in the medium term at 5% per annum for several years.

This follow-on study underpins that view and argues that sustained growth in labour supply, estimated to be over 2.2 % a year for the next 10 years, will generate strong growth, particularly in the first half of the decade, of 5.75% per annum.

"Sustained strong growth in the labour supply will maintain a capacity for growth in Ireland that will far outstrip that in other EU countries where the demographic outlook is much less favourable," said Mr O'Brien.

The boom will come from relatively rapid rates of growth in the population with the greatest earning and spending power that support growth in demand, he said, adding that all areas of financial services will see solid growth from pensions, mortgages and other financial products.

Spending on leisure, travel and entertainment will also feel the benefits.

Mr O'Brien rejected suggestions that the economy was losing out as a manufacturing base.

Multinationals account for 80% of output and their impact on the economy "has been overestimated", he said.

Proof of that emerged after the slowdown in 2000/2001, when some high-profile multinational firms shut their doors.

During the period, the economy grew well above the expectations of most and employment "which I regard as the best indicator of economic activity, continued to grow," he said.