‘Stunning’ growth figures reflect path of early Celtic Tiger years

The economy is growing at such a huge rate that the recovery is approaching a virtuous path similar to the early Celtic Tiger years before the emergence of the credit-fuelled crash.

Buoyant exchequer tax returns were signalling for several months that the economy was picking up a head of steam.

Analysts had waited for the publication of the CSO growth figures for the first three months of this year before updating forecasts.

The official figures, published yesterday, showed that GDP surged by 5.2% last year and had continued to expand by 1.4% in the first quarter this year — meaning Ireland is outpacing EU growth by a considerable amount.

Many economists now believe the economy will grow by over 5% this yearand expand by a further 5% in 2016 — potentially sustainable rates ofgrowth last posted in the late 1990s, when Ireland was recovering from the previous debt crisis of the 1980s. Ireland is now growing six times faster than the eurozone average.

The figures mean the Government will have a huge bounty to either reduce debt or bolster its arsenal for a large expansionary budget in October, the last before the general election.

“They are amazing figures,” said Alan McQuaid at Merrion Capital. The Government “could run amok” if there were no fiscal constraints from the EU to rein in spending before the election, he said.

Austin Hughes, chief economist at KBC Bank Ireland, said the growthnumbers were “unique in Europe”. The momentum is such that the economy would likely be the fastest growing in Europe again in 2016.

“It is moving from the vicious cycle to the virtuous circle. It sort ofsuggests that, bar international catastrophes and domestic political surprises, we are set on a good path. There is no doubt that strong momentum is building,” Mr Hughes said.

He said the Government faces a challenge of spreading the economic bounty across the country but without squandering the recovery as many regions are undoubtedly lagging. Policymakers face new challenges and have to show that lessons have been learned from the crash, he said.

The Government faces little pressure to sell off banking assets at an earlystage as banking profits will likely rise sharply as the momentum builds behind the economy, Mr Hughes said.

Dermot O’Leary, chief economist at Goodbody Stockbrokers, said the CSOfigures provided further confirmation of the economic momentum.

“The figures were stunning. The broad-based nature of the recovery is impressive. I am pleased that there is a [EU] fiscal strait-jacket because the private sector is already doing enough to drive the economy,” Mr O’Leary said.

“We will revise up forecasts on the back of these strong numbers,” said David McNamara, an economist at Davy Stockbrokers. The CSO delayed publication of the quarterly figures to take account of new treatment for the aircraft leasing industry.

Michael Connolly, senior statistician at the CSO, said GDP levels had now exceeded the post-crash level. Because the population has increased, per capita GDP levels have some way to go to catch up on their 2007 peak.