Economy expected to grow 5% as consumer confidence rises

A slew of recent economic indicators point to stronger-than-expected growth this year, according to Davy stockbrokers.

Analyst Conall Mac Coille said an uptick in both manufacturing and services recorded in the purchasing managers' indices (PMIs) for January is likely to translate into a 5 per cent expansion in gross domestic product (GDP) in 2017.

This represents a significant upgrade on the 3.7 per cent previously signalled by the brokerage.

Mr Mac Coille said the stronger-than-expected outturn means the slowdown recorded in the second half of 2016, following the Brexit referendum, has “now completely reversed”.

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Fastest-growing economy

“Once again, the PMI surveys suggest that

Ireland

is the fastest-growing economy in the euro area, consistent with 5 per cent annualised growth. So there could be upside risks to our forecast for Irish GDP to grow by 3.7 per cent in 2017,” he said.

Mr Mac Coille also highlighted a sharp rise in consumer confidence, which jumped to a seven-month high.

However, he noted that recent manufacturing output data highlighted that sterling’s weakness and poor UK orders have hurt the sector, noting manufacturing output expanded by just 0.3 per cent in 2016.