Photo caption: Cebr’s Douglas McWilliams on Irish TV (RTE) discussing the forecasts.

• Cebr’s latest forecasts predict that Irish economic growth in 2014 likely to under-perform forecasts because of weak exports of goods, mainly chemicals and pharmaceuticals

• Irish GDP growth of only 1.3% is likely this year

• But Irish consumer spending is starting a sustained recovery which is likely to gather strength in 2015 with GDP growth of 3.4%

• With strong services export growth combining with rapidly rising investment growth and a consumer recovery, Ireland should grow by over 3% per annum from 2015-19

• Despite slower growth, the Irish deficit reduction plan is still on track. Cebr are forecasting a Budget surplus of 0.8% of GDP by 2018

• The main risk is that with the external pressure to fix the country’s finances removed, politicians might be tempted to relax their tight grip on public finances before the problems are fully solved

 

Cebr predict that after a difficult 2014, the Irish economy will recover to growth at around 3% in 2015. In Cebr’s latest quarterly forecasts for the Irish Economy ‘Irish Economic Prospects June 2014’, the forecasters predict Irish GDP growth of 1.3% for 2014 but a recovery to 3.4% in 2015. Growth is forecast to average 3.2% per annum from 2015-2019.

 

Other features of the new forecasts released today are:

• Consumer spending growing by 1.2% in 2014 and growth accelerating further to an average of 2.3% from 2015-19;

• Investment to grow at 10.0% in 2014 and to average further growth at an annual rate of 7.6% from 2015-19;

• Exports to be hard hit by falling pharmaceutical sales and chemical exports but to recover to growth of 3.0% in 2014 and an average growth of 5.1% from 2015-19 based strongly on buoyant service sector exports;

 

Oliver Hogan, director at Cebr, said: “while pharmaceutical exports have been hit by a decline in sales, services exports are expected to more than make up the difference. We expect robust GDP growth of 3.4% in 2015 driven by the recovery in construction and inward investment.”

 

Because exports are a relatively lowly taxed sector, the export shortfall has done little damage to the government’s fiscal plans and provided that the predicted growth revival takes place, the government deficit should be eliminated by 2017 and surpluses of 0.8% and 1.9% are predicted for 2018 and 2019.

 

Douglas McWilliams, executive chairman of Cebr said ‘Cebr was the first external forecaster to predict that the Irish recovery plan would work. We now see sufficiently strong growth in the Irish economy to eliminate the Budget deficit altogether by 2017 if politicians can resist the temptation to start spending money again.’