Evidence from the Irish economy continues to paint a picture of strength, especially in domestic activity, according to NCB Stockbrokers' latest economy update.
Despite the uncertainties in the international economy, and especially rising oil prices, NCB said that growth in consumer demand remains solid, underpinned by growth employment and real incomes.
NCB's Dermot O'Brien said that investment is rebounding strongly and exports are gradually responding to the international recovery. He adds that inflation remains subdued, apart from energy prices and the Government finances are in better than expected shape.
Real GDP here was 5.1% higher in the first half of 2004 compared to the same time in 2004 - NCB said this was three times that of the euro zone as whole. Among the most up-to-date indicators, the NCB Purchasing Managers' surveys show that activity held up in the third quarter close to the best levels of the last three years.
The services PMI continues to give strong signals with readings that have only been bettered on an ongoing basis during the height of the Celtic Tiger years, NCB adds.
'The resilience of services sector activity in the face of external uncertainties is continuing testimony, in our view, to the positive force of Ireland's unique demographic dynamic,' commented the economist.
This strength in domestic economic activity is being reflected in substantial tax buoyancy, NCB adds. In the nine months to September, tax revenue rose by over 12% on the same time last year.
They point out that this revenue does include some once-off income tax gains from bogus non-resident account holders, but, even if these are excluded, tax receipts are still up 9.5% in the January to September period.
'All in all, despite international uncertainties, the momentum in the Irish economy remains undimmed and we are maintaining our forecast for GDP growth rates of 6.5% this year and 6% for next,' Mr O'Brien concluded.
