A report from Davy Stockbrokers has forecast strong economic growth over the next two years, but says it is highly likely that growth will slow in the later years of this decade.
The report predicts that gross national product will expand by 6% this year and 5% in 2007, helped by a number of factors including SSIAs, another generous Budget, population growth and continued buoyancy in housing.
Economists Robbie Kelleher and Rossa White said the housing market remained the most obvious risk, but population trends had significantly increased the underlying demand for housing.
The report said a price adjustment still seemed likely, but the timing was hard to predict and any fall-out would be reduced by the increase in personal incomes over the last few years. Davy forecast that house completions would fall to 75,000 in 2010 from 90,000 this year and next year.
On this basis, the report predicted growth of 3% in 2008 and 2.5% in the following two years. Davy said the withdrawal of the SSIA stimulus would also slow growth.
