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GDP growth accelerates according to Bank of Ireland's Quarterly Economic Outlook - despite slowdown predictions

12-Jul-07

    Irish output (GDP) growth continued to accelerate in the first quarter of 2007, despite widespread commentary on an economic slowdown according to Bank of Ireland's quarterly economic outlook, which was published today, Thursday 12 July 2007. GDP growth reached 7.5% in the first quarter of 2007, surpassing the 5.4% growth trend in the past five years, and 5.7% in 2006.

    GNP also remains strong with household income growth predicted to reach 9.5% in 2007, along with a 3.5% rise in employment and a 5% increase in average pay. Strong consumption growth is forecast to continue regardless of the effect of any SSIA spending.

    Commenting, Dr Dan McLaughlin, Group Chief Economist, Bank of Ireland and author of the economic outlook said: "Despite widespread commentary on slowdown in residential construction and a loss of national competitiveness, GDP growth continued to accelerate in quarter one 2007 particularly in relation to exports. While a fall off in the housing market is evident, it is not as pronounced as has been publicised - in fact house building in the first half of this year will be above the same period in 2006. Strong growth in non-residential construction will offset any downturn in residential activity. Our forecast of 6% GDP remains unchanged with 5% forecast in 2008".

    "We have not yet seen a notable SSIA impact on spending. Household income growth is expected to reach 9.5% in 2007, boosted by employment growth of 3.5% and a 5% increase in average pay, which will ensure strong personal consumption regardless of any SSIA effect. Inflation looks set to average 4.8% in 2007 before falling to 2.7% next year. Interest rates may well peak at 4.25% in the coming months", added Dr. Dan McLaughlin.

    According to Bank of Ireland, employment growth is forecast to slow slightly with figures reaching 75,000 in 2007 and 60,000 in 2008. However, labour supply growth will adjust leaving the unemployment rate unchanged. Finally, the 2007 Budget is predicted to end the year as forecast.


    Ends

    12 July 2007

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