Bank of Ireland predicts economy will grow by 4.7% in 2018

The Bank of Ireland has revised its forecast for the Irish economy in 2018, with GDP growth set to increase from its initial prediction of 3.8% to 4.7% for the remainder of this year.

The latest Ireland Outlook from Bank of Ireland notes significant momentum in the Irish economy at present, which will provide much-needed confidence to entrepreneurs and small businesses across the country.

Activity between Q1-Q3 2017 was well ahead of expectations and the Bank’s high-frequency data suggests there has been a similarly impressive start to 2018.

GDP is said to have expanded by 7% in 2017, revised up from the Bank of Ireland’s initial forecast of 4.8%.

Although total investment during Q1-Q3 2017 experienced a sizeable decline year-on-year, levels of modified investment (excluding R&D-related intellectual property imports and aircraft leasing) recorded double-digit growth.

Despite the lingering uncertainty of the fall-out from the UK’s EU Referendum, business owners across Ireland remained upbeat at the turn of the New Year. Two-thirds anticipate expanding their business during the next one-to-three years.

Employment growth averaged 2.8% between Q1-Q3 2017, with more than 2.2 million now in some form of work. Meanwhile Ireland’s unemployment rate is back on the decline, standing at 6.1% in January, with forecasts of it falling to just 5% by the end of next year.

In light of increasing employment levels, growing household incomes are predicted to help levels of consumer spending rise by 3% in 2018 and 2019.

Dr Loretta O’Sullivan, Group Chief Economist, Bank of Ireland, said: “Further job gains and rising incomes are expected to underpin solid consumer spending in Ireland.

“Underlying investment, especially construction activity, is set to expand as well, with exports continuing to benefit from the improving global economy.

“It is clear that the Irish economy is back on its feet with a range of indicators above their previous peak and others not far off.”

Date published 2 Mar 2018 | Last updated 2 Mar 2018