Strong Growth Expected to Continue into 2015

• Unemployment set to fall below 10 per cent for first time since 2008
• GNP forecast to increase by 4.6 per cent in 2015
• Assessment of proposed Central Bank macro-prudential measures included with Quarterly Economic Commentary

Output growth (both GNP and GDP) is set to increase by approximately 5 per cent while unemployment will fall to an annual average of just over 11 per cent in 2014, according to the latest analysis published today, Wednesday, 17 December 2014, in the ESRI Quarterly Economic Commentary, Winter 2014 The Commentary, published every three months, provides an independent short-term forecast for the Irish economy. Speaking about the analysis, report author Dr David Duffy said “The Irish economy has seen strong growth in 2014. We expect the recovery and strong growth rates to continue into 2015. However, the continued poor performance of the Euro Area constitutes a downside risk. Next year we expect foreign demand for Irish goods and services to be complemented by a significant contribution to growth from domestic sources. Overall, we expect GNP to increase by 4.6 per cent with unemployment set to fall to an annual average of 9.7 per cent in 2015.” Report co-author, Dr Kieran McQuinn, said “A consequence of the economic developments in 2014 has been the particularly strong growth of taxation receipts, contributing to a reduction in the deficit to approximately 3.5 per cent for this year; this is a full percentage point better than was expected this time last year. However, from a macroeconomic perspective, we feel the budget, by being quite expansionary in nature, was somewhat less cautious than we would have preferred. As a result we forecast the deficit in 2015 to be 2.4 per cent. In the previous Commentary we had suggested a fiscal neutral policy, which would have allowed a greater margin of error in achieving the 3 per cent deficit target next year.” Also included as an appendix with the Commentary is a submission made by the editors to the Central Bank on the proposed macro-prudential measures. Speaking about the submission to the Central Bank, Dr Kieran McQuinn said: “While the adoption of the Central Bank's proposed macro-prudential measures is in principle a welcome and highly sensible development in an Irish context, we argue that in the interests of efficient policy implementation such measures should be applied on a counter-cyclical rules basis. Such a rule should be based on a number of key housing and property market related indicators.”