Stockbrokers Davy said today it is expecting a broad-based acceleration of economic growth (GNI*) to 4.5% in 2024 and 4.3% in 2025 from an estimated 3% growth rate in 2023.
Davy's said its new economic forecast is underpinned by employment growth of 2% a year, boosted by foreign direct investment, as well as a significant increase in housing output.
It said its economic growth forecasts are above consensus but noted that buoyant activity levels have put pressure on Ireland's infrastructure.
"Priorities for capital spending include housing and decarbonisation. Threats to competitiveness must be tackled to avoid a slowdown in FDI and job creation," the stockbrokers said.
It noted that demand in the economy is strong and cautioned that inflation could be reignited if another expansionary Budget is delivered this year.
"We expect continued Budget surpluses this year and next. Further ahead, funding levels will rise due to higher debt rollovers, increased investment and the costs of an ageing population," it added.
Yesterday, the Central Bank reduced its forecasts for economic growth this year and said it was now predicting that Modified Domestic Demand will expand by 2.1% in 2024, down from its forecast in March of 2.2%.
It has also cut its forecast for Gross Domestic Product to 1.8%, down from its previous projection of 2.8%.
The bank revised upwards its projection for growth next year, forecasting that MMD will increase by 2.5% in 2025 up from its previous forecast of 1.9%. It has left its projection for 2026 unchanged at 2%.
Davy today has forecast an increase to 36,000 new home completions this year and 42,000 next year, but said this remains well short of its estimate of underlying housing need.
It also predicts that residential property prices will grow by 7.5% this year due to a limited increase in transactions.
