Goodbody Stockbrokers has raised its forecast for the Irish economy this year, saying recent figures indicate that the economy resumed growth in the first quarter of this year. A number of economists have previously suggested that the economy grew in Q1.
Goodbody said it now expected economic output, as measured by gross domestic product (GDP), to be flat in 2010. It had previously expected a 1% fall in output.
It says the multi-national sector is leading the recovery, and as a result predicts that gross national product (GNP) - which excludes profit from this sector - will still drop by 0.5% this year. But Goodbody has also raised its growth forecast for 2011 to around 3% for both measures.
Goodbody economists Dermot O'Leary and Deirdre Ryan say evidence from car sales, retail sales and VAT receipts suggests that a big increase in saving last year was partly reversed in early 2010. They now believe consumer spending will be flat this year.
The Goodbody report says the main Irish stock market beneficiaries of the recovery should be the financial stocks, Aer Lingus, CPL and ICG.
It adds that better growth will help in stabilising the public finances, and the general government deficit could fall to 10% of GDP this year.
