Despite a weak first half, Davy Stockbrokers today said that they are still expecting GNP growth of 4.5% in 2005. The stockbrokers today also upgraded their expectations for 2006 and 2007 with growth predicted to come in at 6% for the two years.
Davys said that their forecast for 5% growth in consumer demand this year remains unchanged. But their forecast growth has been upgraded to 6.5% for 2006 and 6% for 2007 - mainly due to a more optimistic view of the impact of the maturing SSIAs.
On housing, the stockbrokers said that completions this year look like they will be broadly in line with last year's figures. But they add that a recent pick-up in housing starts suggests that the outcome for 2006 may be better than previously thought. They now see house completions at 77,000 this year, falling to 75,000 next year and 72,000 in 2007.
The stockbrokers added that export growth has been disappointing so far this year and they have reduced their forecast growth for 2005 to just 1.3%. This would be the poorest performance in the sector since 1974.
Davy's said that the European Central Bank seems intent on raising rates and that a 0.25 percentage point rate is now likely at the bank's December meeting. However, they added that they do not see rates going above 2.5% in 2006.
