Growth prediction revised to 10.6%

Further predictions by economists that this year could see double digit growth were made yesterday with one report predicting that per capita the Republic could become the third wealthiest member of the EU within six years.

Goodbody Stockbrokers has revised its prediction for growth in GDP to 10.6 per cent, a sharp rise from an earlier prediction of 7.7 per cent. The increased estimate is due to increased expectations for domestic consumption, investment and the value of stock held in the economy.

Growth of 10.6 per cent would mean this year would be comparable to the record year of 1997, when GDP increased by 10.8 per cent.

Mr Dermot O'Brien, chief economist with NCB, said his estimate for growth this year was 10 per cent, a forecast he'd made prior to Thursday's report from the International Monetary Fund (IMF) and the publication by the Central Statistics Office of figures showing huge growth in exports to non-EU countries in the first six months of the year.

Mr Dan McLaughlin, chief economist with ABN-Amro, said on Thursday the high export figures indicated that GDP growth for 2000 could end up being significantly ahead of 10 per cent.

Goodbody said labour management was the key to continuing economic success and recommended the provisions of the PPF be adhered to.

"Growth, despite continuing surprises to the upside, shows little intention of deserting these shores," said Mr Colin Hunt, head of research at Goodbody. "To sustain this growth, supply side management needs to be adhered to."

Labour demand is set to exceed supply by over 40,000 in the next two years, according to the company, and "an efficient, centralised immigration regime reflecting the experiences of Australia, New Zealand and Canada should be put in place".

Goodbody said that on the basis of its current outlook it expects the Republic to become the third wealthiest member of the EU on a per capita basis within six years.

Mr O'Brien said he expects next year "will be a bit slower" but the risk involved in making predictions on economic growth was more that the prediction would be too low than too high.

The IMF, in its report published earlier this week, predicted GDP growth of 8.7 per cent this year. It described the performance of the economy in recent years as "spectacular" and said the short-term prospect is for continued buoyant growth.