Goodbody Stockbrokers say that 2000 will enter the record books as the strongest year of Ireland's economic expansion with gross national product in real terms growing to a staggering 11.2%.
This claim is made in Goodbody's final economic report of the year, Winter 2000 Review. However, the report adds that the economy is losing momentum and that the peak of the growth cycle has passed with GNP expected to ease to a slower but still impressive growth rate of 8.8% next year.
Goodbody predicts that inflation will fall to 3.6% next year. They say that against a backdrop of likely euro appreciation, more stable oil market conditions and an excise duty-neutral budget, headline inflation should move steadily downwards in 2001.
The report, written by Colin Hunt and Don Walshe, also notes that the housing market is showing signs of slowing down. While demand will remain strong, Goodbody says that house price inflation will ease to 12% in 2001 from an end 2000 high of 18%. However, they predict that outright falls in house prices are on the cards.
The stockbroking firm has trimmed its forecasts for 2001 since its last report because of higher interest rates, diminished consumer confidence due to high inflation rates and the deteriorating industrial relations climate in the public sector.
The authors confirm their long-held view that Ireland's future economic success will be dictated by the quality of labour market management. They call on the Government to increase the standard band of tax to £22,000 and cut 2% off the standard income tax rate in next Wednesday's budget. They say that tax cuts are needed to ensure that Ireland can win in an increasingly intense global competition for labour.
Goodbody predict that the environment for trade growth, due to euro concerns, is likely to be less positive in 2001. They also say that an investment slowdown will occur, due to the increasing maturity of the Irish industrial base.
