Ireland's central bank increased its forecast for 2015 economic growth to 6.6 percent on Tuesday from a 5.8 percent projection three months ago, based on higher employment growth, consumer spending and public and private investment. The upgrade puts the bank closer in line with the government, which upgraded its gross domestic product growth forecast to 7 percent in December after strong third quarter data. That would almost certainly make Ireland the fastest growing economy in the European Union for the second year in a row.
Ireland has rebounded sharply from a 2010 international bailout, helped by a "broad set of favourable factors" including pent-up demand, the weakness of the euro relative to export markets and low interest rates, the central bank said. "The latest forecasts continue to suggest that the economy is going through a period of exceptionally strong growth which is likely to ease only modestly over this year and next," the bank said.
The bank upgraded its forecast for growth in personal consumer expenditure in 2015 to 3.2 percent from 3.0 in October. In part that was due to better than expected expansion in employment while it also ticked up its forecast of growth in compensation per employee to 2.4 percent from 2.3 percent.
Growth in public consumption from the state sector jumped to 3 percent from 0.5 percent in October after the government announced a supplementary budget mainly focused on shortfalls in funding of the health service. It said the overall economic growth numbers were also pumped up by the country's large multinational sector, which has relatively little direct impact on the domestic economy. Those companies helped lift investment expenditure, exports and imports, it said.
The central bank sees economy growing by 4.8 percent this year, up a touch on its previous forecast, and 4.4 percent in 2017 as growth in personal consumption, employment and exports slows. Ireland's statistics service is due to release final 2015 GDP data in March.