Ireland is set to be the fastest growing economy in the EU for a second consecutive year in 2015, according to Goodbody Economics. In a paper on the health of the economy, the stockbroking firm says the 5% GDP growth in 2014, will be followed with a further 4% growth in the coming year.
Dermot O'Leary, chief economist with Goodbody, said there has been concerns that Irish statistics have not been telling the full story. "We've had talk of the effect of contract manufacturing on GDP and how it might be inflating the numbers. People want to know what's happening on the ground. Domestic demand tells us if businesses are investing and if consumers are spending," he explained.
"That measure tells us that the rate of growth in investment is up again. On the consumer side, it's still a muted recovery because of austerity over recent years and high household debt. But overall this is a fast growing economy. We are making up lost ground," Mr O'Leary states.
One of the features of the recovery will be the return of the crane to the skyline in cities and towns around the country. "Prices are the key driver of the return to life of the construction sector. We've seen lots of foreign capital coming into the country to buy up finished buildings, especially around Dublin. We're now moving up the risk curve and back into the construction sector. That's a positive because it will create jobs," he added.
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The big business story of the day is the expected third bid from International Airlines Group for Aer Lingus. The board of the airline has rejected two approaches in recent weeks - the latest at €2.40 per share. David Donnelly, an investment analyst with Cantor Fitzgerald, said the speculation suggested that a third approach could be forthcoming in the next week. "The major variable on the next bid price will be the requirements that the Government are going to make in terms of retention of the Heathrow slots and connectivity with Dublin," he said.
Mr Donnelly believes that there will be more back and forth offers and rejections over the coming weeks and that the offer should go above the €2.50 mark where the shares closed on Friday. "Aer Lingus is a profitable airline. Last week, they reported that 2014 numbers were going to be stronger and they've made substantial savings on fuel. They've removed a significant overhang in relation to the pension dispute. Any follow up bid should be higher than the €2.50 mark," he concluded.
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MORNING BRIEFS - Dublin based pharmaceutical company Shire has agreed to acquire New jersey based NPS Pharmaceuticals in a deal worth in excess of $5 billion. In a note to the stock exchange, Shire said it will pay $46 per share for NPS which specialises in drugs for gastrointestinal disorders. This represents a 51% increase on the NPS share price in mid-December when rumours of a deal first emerged. The outcome marks a return to deal-making for Shire after its plan to sell itself to AbbVie fell apart last year.
*** The optimism in the construction sector is reflected in the Ulster Bank Construction PMI, which measure current and future activity patterns in the sector. The index finished out 2014 on a positive note. New orders continued to show expansion in December albeit at a slower pace than the previous four months. The indices for housing and commercial construction activity also fell in the month but they remain at elevated levels and civil engineering activity expanded at its fastest pace in eight years.
