ESRI Forecasts Strong Growth, But Warns Challenges Still Remain

August 07, 2014

News
Macroeconomics

Growth expected to remain strong in 2014 and 2015
Unemployment forecast to fall to 9.8% in 2015
No sign of a "bubble" in the property market

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Economic growth is expected to remain strong in 2014 and 2015, with a Gross National Product (GNP) of over 3.5 per cent forecast in both years, according to the latest analysis published today (Thursday, 07 August 2014) in the ESRI Quarterly Economic Commentary.

The Commentary, published every three months, provides an independent short-term forecast for the Irish economy.

Speaking about the latest Commentary, Dr David Duffy (ESRI) said:

“GNP continues to provide the best measure of the standard of living (and output) of Irish residents. We are expecting growth in GNP in 2014 of 3.4 per cent and growth in GNP of 3.7 per cent in 2015. Further declines in unemployment are forecast, with the headline rate envisaged to fall to 9.8 per cent in 2015.”

He continued:  “While the outlook for the economy is positive, the weak growth prospects for the euro zone are a concern. Domestically the particularly low rate of investment, the high rate of unemployment and the weak levels of credit being extended remain as issues to be addressed.”

In further comment, Dr Kieran McQuinn (ESRI) said:

“Despite the strong increases in house prices observed of late, particularly in the Dublin area, house prices in the Irish market still appear to be undervalued. At present, there is no sign of a “bubble” in the domestic market and any recovery occurring at this point is almost a “credit-less” one. Much of the upward pressure on house prices is due to the slow supply response. The focus of housing market policy should be to address this issue.” 

For further information on the research please contact:
David Duffy (Senior Research Officer, ESRI),  david.duffy@esri.ie
Kieran McQuinn (Associate Research Professor, ESRI), kieran.mcquinn@esri.ie

Notes for Editors

1. The Quarterly Economic Commentary, Summer 2014, by David Duffy, John FitzGerald, Kieran McQuinn, David Byrne and Ciara Morley (ESRI), will be published online on the ESRI website on Thursday 07 August.
2.This Quarterly Economic Commentary (QEC) includes the following Special Articles* and Research Notes**

  •  "The Distribution of Income and the Public Finances", by John FitzGerald, ESRI Research Note No. 2014/02/01, (Published online 28/07/14).
  • "Household Formation and Tenure Choice", by David Byrne, David Duffy and John FitzGerald, ESRI Research Note No. 2014/02/02, (Published online 30/07/14).
  • "Updated Estimates for the Extent of Negative Equity in the Irish Housing Market", by David Duffy, ESRI Research Note No. 2014/02/03 (Published online 01/08/2014).
  • "Projected Population Change and Housing Demand: A County Level Analysis", by Edgar Morgenroth, ESRI Research Note No. 2014/02/04 (Published online 06/08/2014).
  • "Bubble, Bubble Toil and Trouble", by Kieran McQuinn, Special Article in the Quarterly Economic Commentary, Summer 2014, (Published 07/08/2014).

ESRI Press Office, 353 1 8632000; press@esri.ie

*Special Articles are published in the QEC in order to foster high-quality debate on various aspects of the Irish economy and Irish economic policy. More information on Special Articles.
**Research Notes are short papers on focused research issues.