Unemployment is set to fall below 10% for the first time since the economic crash as domestic demand picks up and external forces help GDP growth tick towards 4% again this year.
Jobs Minister Richard Bruton’s prediction earlier this week that the country will achieve full employment in 2018 — two years ahead of previous predictions — gathered credence yesterday as a leading economist indicated the unemployment rate would likely rest at about 9.5% by the end of 2015.
Merrion Stockbrokers economist, Alan McQuaid said steady progress is being made and the government’s goal of seeing the rate dip below 10% should be achieved this year if conditions remain largely stable.
House price growth fuelled by severe shortages especially in the Dublin market shows little sign of abating with another year of double-digit price increases expected again this year.
Following an estimated average rise of 12.8% in house prices last year, Merrion is now anticipating a rise of 10% in 2015 although the growing number of planning permissions lodged in the third quarter of last year may alleviate the supply shortage.
The Central Bank’s proposed restrictions on mortgage lending may also push down on prices this year but the improving economic backdrop should help sustain the house price recovery in the short-term even with credit restrictions.
Personal spending, which has lagged behind other sectors of the recovering economy to date, is set for a stronger revival this year with growth of 1.5% projected — almost double the estimated increase seen throughout 2014.
The improving labour market should have a positive knock-on effect in that regard as should the modest income-tax relief for workers which was announced as part of the measures in last October’s budget.
Budget 2015 saw the higher rate of income tax cut from 41% to 40% along with reductions in the universal social charge with the 2% rate falling to 1.5% and 4% being cut to 3.5%.
Following 12% growth in the export sector last year, another strong performance is being flagged for the coming year.
Mr McQuaid anticipates it will be difficult to maintain the pace of last year’s export growth but still expects a 7% increase in 2015.
The improving indicators should help the country’s budget deficit — which stands at 3.8% of GDP — fall close to 2.5% although potential spending over-runs on the health budget that may need shoring up could hamper progress.
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