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Investec predict 2.5pc GDP growth in 13

Friday, August 15 15:45:14

Investec economist, Philip O'Sullivan, today gave a slightly more conservative forecast of Irish GDP than several other economists, putting growth for this year at 2.5pc.

He said the economy should grow by a more robust 2.8pc next year.

Mr O'Sullivan said that the economy has, since the start of the year, built on the progress made during 2013.

He noted that the domestic economy has been a particular driver, although net exports remain an integral part of the overall growth story.

"The broad nature of the recovery is reflected in the fact that the three Irish PMIs - Services, Manufacturing and Construction - have been simultaneously above-50 since September 2013. We see GDP growing 2.5pc this year and by a further 2.8pc in 2015 and while such headline figures can be distorted by the multinationals, we are particularly encouraged by the rising numbers at work and favourable Exchequer trends, which better illustrate the underlying domestic recovery. With that said, a number of challenges remain, chiefly the need for deleveraging in some areas and the worrisome issue of long-term unemployment. Vigilance is required to ensure that Ireland maintains the above progress," he said.

He noted that Irish sovereign bond yields fell to their lowest ever today.

"In terms of our trading calls, in this issue we again profile the IRISH 3.4pc 03/24 bond in detail. Earlier today the Irish 10 year yield went below 2pc for the first time in history, while the spread over the German 10 year bund has also gone below 1pc - if it closes there today it will be the first double-digit closing spread over the bund since December 2008. While speculation about the ECB returning to its toolbox to dig out further easing measures, including the possibility of QE, is the key driver behind this latest move, fundamental (the improving Irish economic outlook) and technical (ratings agency upgrades, including a potential move by Fitch later today) factors are providing further reassurance."

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