B of I economist dismisses slowdown talk

Bank of Ireland chief economist Dr Dan McLaughlin has dismissed claims that Ireland's economy is set for a slowdown.

In a speech to the Irish Home Builders' Association, Dr McLaughlin said he expected 6 per cent growth in 2007 and 5 per cent in 2008, despite a spate of forecasts projecting a slowdown for the economy.

He told the gathering that most of the macro-indicators - including retail sales, industrial production, foreign travel and unemployment - did not support the idea of a softening in the pace of growth.

He also rejected suggestions that Irish economic growth was unbalanced. "There are a number of economic viewpoints about the Irish economy which are often voiced but have little in the way of support from the facts," he said.

Dr McLaughlin conceded the housing market had slowed, with mortgage lending falling to 22 per cent in March 2007, from a peak of 28 per cent in spring of 2006.

Annual house price inflation, currently at 7.4 per cent, has also slipped, according to the latest Permanent Tsb index, and now trails the pace of growth in private sector rents.

"This is a very unusual situation and suggests that the demand for housing has not fallen but that the decision to rent or buy is now biased to the former," said Dr McLaughlin.

He said that uncertainty over stamp duty had made an impact on the market but said it was a "secondary market issue" because few first-time buyers qualify to pay it. The interest rate cycle was a more fundamental issue, he said.