Consumer spending has started contributing to the Republic’s economic growth at a rate not seen since the height of the boom, according to a new report.
The Consumer Market Monitor, published by the Marketing Institute of Ireland and UCD Michael Smurfit Graduate Business School, covers the last quarter of 2015 and highlights a strong recovery in consumer spending.
It said this was “a reflection of the pent-up demand from rapidly growing sales of big ticket items”, including new cars, homes and home furnishings, electrical goods and other consumer durables.
The monitor predicted consumer spending would keep an upward trajectory this year “and for the foreseeable future” – driven by employment growth and wage increases.
All told, 1.98 million people are currently at work, up by 158,000 since the low point in 2012, with evidence suggesting pay increases of about 2 per cent were common in 2015 and likely to happen again in 2016.
“These factors led to a remarkable increase in the amount of disposable income that is circulating in the economy,” the monitor said. “Gross disposable income increased by an estimated 7.5 per cent in 2015, an increase level not seen since the boom times.”
Consumer spending is back to a level of about €90 billion, close to the 2007 peak.
Bubble fears played down
The report also played down fears of a new bubble inflating and pointed out that “a normal healthy market would have grown [over the course of the recession], so we should probably be at a level of between €100 and €110 billion by now.”
“Consumer spending accounts for over 50 per cent of GNP in Ireland and is a critical factor in driving recovery in the economy,” said one of the report’s authors, Mary Lambkin.
