Davy predicts economy still has plenty of room to grow

Official estimates underplay the amount of room the economy has left to grow with many indicators still far below pre-recession levels despite recent improvements.

That’s the view put forward by Davy Stockbrokers in their monthly economic bulletin which indicates estimates from the International Monetary Fund and European Commission that Ireland’s output gap — the difference between actual and potential GDP — is among the smallest in the euro area at -1% is inaccurate and overly pessimistic.

The two institutions, both of which are part of the troika along with the European Central Bank, consider Ireland and the UK to be at similar cyclical positions despite Irish GDP still lagging some way behind pre-recession levels, unlike the UK economy which surpassed its GDP peak in the second quarter of the year.