A leading economist has hit back at what he describes as a spate of bearish forecasts on the Irish economy.
Bank of Ireland's Dr Dan McLaughlin says most of the current economic figures do not point to any softening in the pace of growth.
He still expects growth of 6% this year, easing to 5% in 2008. Recent forecasts for 2008 have been nearer, or even below 4%. The economist says it is not obvious why the potential growth of the economy should fall from close to 6% to 3.5-4% in 18 months.
Dr McLaughlin, speaking to the Irish Home Builders Association, rejects suggestions that Irish growth is unbalanced, saying data from 2001 to 2006 shows all parts of the economy growing at much the same rate. He also argues that household savings are high, which means many people benefit from rising interest. 'This view is also rarely heard,' he says.
But the economist agrees says the housing market has slowed. Dr McLaughlin says the risk of a sustained decline exists, but it is not high. He believes a period of flat or only modest price growth is more likely. The economist also argues that stamp duty is 'a secondary issue' and higher interest rates are a more important issue.
