Research group predicts Irish economic growth of 4.8% in 2021

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James Cox

The Irish economic growth prediction for 2021 has been revised up to 4.8 per cent by a leading research group.

Davy Research had previously predicted GDP of 3.8 per cent this year.

However, the more positive prediction comes following a strong Irish export market along with multinational sector output.

The report cites the pharmaceutical and information and communications technology sectors as crucial in the positive GDP prediction.

However, fresh Covid-19 business and travel restrictions will disrupt domestic spending in the first quarter of 2021.

The report forecasts a rise in consumer spending and employment as restrictions are lifted, with the unemployment rate to fall to 12 per cent by the end of the year.

“We expect consumer spending (5.2 per cent) and employment (5.9 per cent) to see a partial rebound, with the government balance narrowing to €18 billion, 4.6 per cent of GDP, in 2021. House prices will rise by 3 per cent this year with mortgage lending rebounding to €9.5 billion,” the report reads.

Vaccination

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The report stresses that a successful vaccine rollout is key to their predictions.

It adds that the predictions may be too conservative as they presume that sectors hit the hardest by the pandemic (such as construction, retail and hospitality) will remain below pre-Covid levels by the end of 2022.

Finally, the fact a no-deal Brexit has been avoided is seen as crucial.

While there are few benefits in the short term, the report states that it may help with investment in SMEs in time.

 

 

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