Central Bank raises economic forecast; says no new fiscal policies needed to boost activity
The Central Bank has changed its forecast for growth in the economy, saying it now expects it to outperform what it previously thought.
In its quarterly bulletin, it said GDP of 4.1% was now expected for 2015, up 0.3% on its previous forecast three months ago.
It is also predicting growth of 4.2% next year - a full half percentage point higher than previous forecasts.
GDP growth was 4.8% last year.
In its report released this morning, the Central Bank said: "While the initial strengthening of activity in 2014 was driven by net export growth, the recovery over the past year has become more balanced, with domestic drivers increasingly playing a more prominent role.
"The signs emerging from a broad range of other data and indicators point to an increase in the pace of domestic demand growth in the first-half of this year."
The Central Bank said the Government did not need to do anything new to stimulate growth and added extra revenues should be used for debt reduction rather than for pre-election giveaway.
In it's report, the Bank notes: "Looking ahead, the strong growth outlook implies that there is no need for fiscal policy to support economic activity and, importantly, also provides an opportunity to move ahead with fiscal consolidation and debt reduction in favourable circumstances."
The Bank said consumption has benefitted from continuing solid growth in employment, particularly full-time employment, which is helping to boost incomes.
However, it said: "Despite recent declines, the high level of household indebtedness remains a headwind to any strong recovery in consumption."
