Broad-based Irish economy 'growing faster than forecast'

One of the country’s leading think-tanks has claimed Ireland will have one of the fastest growing economies in Europe this year.

Broad-based Irish economy 'growing faster than forecast'

One of the country’s leading think-tanks has claimed Ireland will have one of the fastest growing economies in Europe this year.

The Economic and Social Research Institute (ESRI) has joined a growing number of experts in claiming that the country’s revival in fortunes is hitting stronger and faster than originally thought.

It is forecasting gross national product (GNP) – regarded by some commentators as a more honest measure of how economic figures are reflected on the ground - will grow by 5% this year and next.

The dramatic revision in its latest quarterly commentary sees the think-tank with an outlook similar to estimates from the Central Bank’s advisers and business and investment brokers in the last week.

On gross domestic product (GDP) – which includes the profits of multinationals - the ESRI estimates growth of 4.9% this year and 5.2% next year.

It also expects unemployment to fall to 9.6% next year.

But its economic chiefs urged the Government to use any additional taxes, such as money from water charges, to invest in social housing programmes.

They said this will help to consolidate economic growth and ease supply and demand issues which are inflating property prices in some parts of Dublin.

David Duffy, ESRI report author, said: “The recovery in Ireland is broad-based and is stronger than previously thought.

“We have revised our forecasts upwards based on strong growth figures in the first half of 2014, better than expected performance in the net trade sector, a pick-up in investment levels and strong budgetary receipts.

“In our view, GNP continues to provide the best measure of the standard of living (and output) of Irish residents.”

Report co-author Kieran McQuinn said the Government should consider using the extra €500m being brought in to the state’s coffers next year - mainly through water charges – to be used for an investment package.

“€500m in additional revenue is expected to be raised in 2015, with the majority arising from water charges,” Mr McQuinn said.

“Under fiscal neutrality, this would be available to the Government for a consumption or investment package.

“We recommend adopting an investment strategy with targets an increase in the number of social housing units.

“This would help to consolidate growth while also tackling one of the most pressing economic and social policy concerns at this point, namely, the supply-side of the residential property market.”

The Central Bank dramatically revised up its estimates on economic recovery last week.

Forecasting GNP of 4.9% and 3.1% this year and next and GDP of 4.5% and 3.4%, the authority said exports were driving the new success.

The positive reports are backed by assessments from the business lobby group Ibec which is looking at GDP growth of 6.1% and stockbrokers Goodbody pointing to 5.3% growth and Merrion expecting 5%.

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