Davy Stockbrokers has trimmed its growth forecast for this year to 3.4% from 3.8% in its latest report on the Irish economy. It also predicts that growth will slow to 2.6% in 2005, because of an easing of the pace of growth in the global economy.
The stockbrokers cite the higher than estimated accumulation of stocks in the economy last year as the main reason for the 2004 downgrade.
Davy says there is little sign of a slowdown in the housing market in the early months of the year. It has lifted its forecast for house completions to 69,000, the same as 2003.
The report also cuts its forecast for the unemployment rate from 6% to 5% this year after stronger than expected employment figures from the CSO in the last month.
On the public finances, Davy now believes that Exchequer borrowing will come in €1 billion below the €2.8 billion budget target, helped by buoyant revenues and a windfall from tax on offshore accounts.
The report forecasts that the euro will weaken over the year. It adds that the November US presidential election may be important, as any new administration may take steps to rein in the huge US deficit.
In a special report on consumer debt, Davy concludes that though average personal debt, and the percentage of income going on repaying it, is increasing, the 'average person' is not yet under undue financial stress. But the report warns that this may not be the case for those at the margin. It is particularly concerned about first-time house buyers depending on a weaker rental market, and those who have lost jobs in the downturn.
