Economy will bounce back in 2014, says leading stockbroker
IRELAND is set for an economic "bounce back" according to a leading stockbroker that is predicting that the economy will grow faster in 2014 than even the most optimistic government estimates.
International investors are already betting strongly on Ireland's recovery, Davy Stockbrokers said.
This year will be the first 12 months of sustained economic growth since the recession started, Davy said, with growth next year of 2.5pc on the cards.
The Government's own prediction is that the economy will expand by 1.8pc next year. Economic think tank the ESRI agrees with Davy though, and is putting growth at 2.5pc in 2014.
"Ireland is on track for a far more robust recovery than is evident from economic data that is distorted by the pharma patent cliff, which has little material impact on employment or the real economy," said Davy chief economist Conall MacCoille.
"Davy is predicting 2013 will mark Ireland's first full calendar year of expansion in GDP since the recession began and growth in 2014 will bounce back to 2.5pc," he said.
Consumer spending increased this year for the first time since the start of the recession and the construction industry is set to expand a year ahead of what was hoped for -- both key signs of recovery Davy says.
Mr MacCoille pointed to what he said were signs of "a dramatic turnaround in Ireland's fortune", such as four consecutive quarters of jobs growth, expansion of the services sector and a much earlier than expected recovery in construction and industry.
US investment firms like Franklin Templeton, BlackRock and Kennedy Wilson are building up substantial holdings in shares in Irish companies and buying into Irish debt and the Irish property market.
The biggest threats to a sustainable recovery were "stubbornly high" public spending, along with Ireland's exit from the bailout and an election in 2015. These factors may mean Ireland gets locked into "a high tax, high spend economic cycle", Mr MacCoille warned.
This year has seen consumer spending rise for the first time since the recession began -- by 0.4pc. But Davy forecasts that it will grow three times faster in 2014, to 1.5pc.