Continued economic growth predicted

ONE of the strongest advocates of the economy has restated his view this country has the capacity to grow solidly over the next 15 years.

GDP growth of 5 to 5.5% per annum is on the cards for the rest of this decade and for the following decade we are capable of delivering growth of 4/5% in GDP terms.

This will be underpinned by the strong population growth still driving this economy. It will also see us outperform Europe and most OECD economies, he said.

Neither high oil prices nor rising interest rates will knock us out of our stride.

NCB Stockbrokers chief economist Dermot O’Brien made these bullish claims in an address to the Irish Association of Pension Funds conference yesterday. “Because of Ireland’s unique demographics and economic structure, growth is likely to remain strong for the remainder of the decade working out at perhaps 5 to 5.5% per annum.”

Taking the longer view, Mr O’Brien said the economy has the capacity to continue to generate impressive growth rates of 4 to 4.5% in the following 10 years.

This economic performance continues to be underpinned by growth in the population, especially in the most productive 25 plus age groups.

“We are on course to produce a population of 5 to 5.5 million in the Republic of Ireland in the next 20 years.”

Mr O’Brien said while residential property prices should continue to ease there seemed little risk of a property crash.

“We estimate that we will need to continue to produce about 70,000 housing units per annum for the next few years compared to 78,000 in 2004. Back in 1998, NCB expressed the view that the economy was capable of growing at 5% for years to come.”

It was significant, too, that even in 2002, when the global downturn hit hard, this economy generated growth in employment of 1% in the last quarter of the year, he said.

That was supposed to be in a time of recession while some countries can’t even manage that kind of labour market growth in good times, he said.

Mr O’Brien said the rate of increase in residential property prices should ease to 5% or 6% in 2005, but he saw no likelihood of a property “crash” even if interest rates were to increase by a couple of percentage points.

Growth in GDP this year will be about 6%, rising to 6.5% next year, “Growth is likely to remain strong for the remainder of the decade working out at perhaps 5 to 5.5% per annum,” he added.