Economy is on course to reach pre-crisis peak
Growth in 2014 fastest in seven years at over five times the eurozone average
The economy is set to swell to its pre-crisis peak this year, experts are forecasting.
New figures show economic growth in 2014 was the fastest in seven years, outstripping any other European country and expanding at just over five times the eurozone average.
Experts now predict the economy may be bigger by the end of this year than it was in the peak of the boom, but will be much more evenly balanced than the construction-focused Celtic Tiger era.
Britain returned to pre-crisis levels last year. Ireland's population has been growing since 2007, which means that economic output per person will be slower to return to pre-crisis levels.
The economy grew by 4.8pc in 2014, fractionally above the 4.7pc forecast by the Government, according to the first estimate of 2014 growth from the Central Statistics Office (CSO). That compares with 0.9pc in the eurozone and 1.3pc in the European Union as a whole.
Economists hailed the data as showing the strength of the recovery, with one expert predicting Ireland will top the eurozone growth league table again this year.
"You're probably going to see the pre-crisis peak being reached or being surpassed," said Philip O'Sullivan, economist with specialist bank Investec.
"It's important to note that the nature and composition of the economy has shifted as well. The previous peak was artificial as it was led by a housing bubble."
But business lobby group Ibec pointed out that company wealth is still lower than pre-2007 levels, that many households and firms still do not feel the effects of the recovery and that the gains are centred mainly in urban areas.
And while the economy continues to grow strongly, separate figures released yesterday show deflation remains a worry after consumer prices fell for the third month in a row.
But the strong recovery is staving off concerns that Ireland will fall into a deflationary spiral, which could dent the economy and lead to a prolonged period of low prices.
Finance Minister Michael Noonan said economic growth was now broadly balanced.
"The turnaround that we are seeing in the Irish economy is a direct consequence of the policies pursued by this Government and the sacrifices made by the Irish people," Mr Noonan said.
The positive economic data comes as Mr Noonan announced that a 25pc stake in state-owned AIB is expected to be sold on the London Stock Exchange by October.
And €2bn raised from a previous sale of Bank of Ireland rescue loans and a repayment to the State of a loan to Permanent TSB will be used to repay debt from the International Monetary Fund (IMF) early.
The CSO data showed that the economy was firing on all cylinders last year, with net exports and domestic demand both contributing to the growth figure.
"When you look back over the years we don't see a similar result," said the CSO's Michael Connolly, as he detailed the results yesterday.
"It's the improvement in domestic demand that is the most striking."
The economy last year, as measured by gross domestic product (GDP), was €181.33bn. That compares with €168.62bn in 2010.
Goodbody stockbrokers is forecasting that by the end of this year, the economy will expand to €188bn.
"Today's GDP data confirms that the Irish economy is on a totally different growth trajectory to the rest of Europe," said Goodbody economist Dermot O'Leary.
"A breakdown of the contributions to growth in 2014 reveals that the recovery in the Irish economy not only strengthened last year, but it also became more broad-based."
Alan McQuaid of Merrion Stockbrokers said the economy was on track to be the fastest growing economy in the eurozone again this year.
"Ireland has benefited from its close trading ties with the US and UK, two of the strongest performers on the world stage in the past 12 months," Mr McQuaid said.
"Competitiveness gains made against the rest of Euroland in recent years have also helped.
"But the most encouraging aspect is the pick-up in domestic demand, which augurs well for 2015."
And he said that the sharp fall in the value of the euro against both the dollar and sterling would also be a boon for the economy.
But Ibec said the economy remained 5.7pc below its 2007 peak in value terms, with households and firms in many parts of the country not experiencing the recovery.
"Feedback from companies suggests the recovery remains heavily concentrated in urban areas," said Ibec economist Fergal O'Brien.
Despite the strong recovery, however, separate data shows that consumer prices continue to fall here.
But most economists aren't worried. "Ireland is not in our view on the brink of dangerous deflation," Mr McQuaid said.