Bank of Ireland increases growth forecast as more restrictions are lifted

Business confidence continued to rise in May with consumer sentiment also mounting on the back of a further loosening of Covid restrictions.

The latest Bank of Ireland business pulse index rose by 3.8 points to 92.7, some 51.3 points higher than the same period a year ago. The consumer index also increased for a fourth month running to 76.7 last month, with buying sentiment strengthening, too.

Overall, the Bank of Ireland Economic Pulse came in at in 89.5 in May. The index, which combines the results of the lender’s consumer and business pulses, was 4.1 higher than last month and up 45.6 on a year ago.

Growth forecast

The rise in sentiment has led the lender to revise its Irish GDP forecast for 2021 to 5.8 per cent from an earlier guidance of 5 per cent.

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“The May pulse results show that momentum in the Irish economy is building. The headline economic index is now back above its pre-pandemic level, which bodes well for a pick-up in spending as public health restrictions are lifted,” said chief economist Loretta O’Sullivan.

“A number of other factors will also help put the economy on a surer footing over the coming months, including some unwinding of the involuntary savings households built up during the crisis and the return to growth in the global economy.”

It isn’t all good news though with the latest pulse surveys showing that post-Brexit trade frictions are adding to business costs with a potential spill-over to consumer prices from this.