Ulster Bank's chief economist is predicting Irish economic growth rates of 4.5% for 2005, and of 5% for 2006

RTE News:

Speaking at the National Construction Conference earlier today, Pat McArdle said the construction industry will remain an important driver in the continued growth of the Irish economy.

While generally positive on the outlook for the Irish economy, he was skeptical about the widely expected consumer spending boom and said that consumer spending had stagnated.

'Retail sales in August were up 5.7% in value but this was only marginally ahead of Labour Force growth of 5%, implying that individual spending by each person in employment in the country is barely rising', he said.

He added that there is no sign here of anticipatory spending of SSIA money or, of a credit financed consumer boom.

McArdle also spoke about the apparent absence of productivity growth, and noted that three sectors, (Construction, Financial & other business and Government) accounted for all of the recent employment growth, and that none of them was noted for high productivity.

He quoted recent CSO data which indicated that, while the economy was producing jobs, income was not growing at the same rate, thereby implying that productivity was negative.

He added that while employment seems to be growing, the new jobs were relatively low paid ones as there is no sign that this is having the expected knock-on income effects in CSO data, or in the Department of Finance income tax receipts.

McArdle said it seemed inevitable that housing output will fall from current record levels, but he forecast that any significant impact may be delayed until 2007, by which time the commercial sector should be performing strongly and civil engineering, which is heavily influenced by Government, may have finally accelerated.

He said it was hard to understand why the Government keep missing their capital spending targets without offering any reasonable explanation and that another large 'saving' is in prospect again this year'.

Buoyant consumer spending has ‘continued unchecked’