Economy set to beat growth predictions

The economy is primed to beat growth predictions in 2006, figures released yesterday show. Barry O'Halloranreports.

The Central Statistics Office (CSO) said that gross domestic product (GDP), the value of all goods and services produced in the State, grew 7 per cent in the three months to the end of September compared with the same period last year.

The office's quarterly national accounts show that total GDP for the three-month period was €41 billion, as against €38.1 billion a year ago.

The amount of wealth created in the Republic during the first nine months of the year hit €122 billion, a 6.2 per cent increase on the €115 billion generated during same period in 2005.

The news prompted a number of economists to revise upwards their predictions that the economy would grow by about 5.5 per cent this year.

Dr Dan McLaughlin, chief economist with Bank of Ireland Global Markets, pointed out that the 6.2 per cent expansion achieved during the first nine months of the year was well ahead of the 5.5 per cent at which most experts had pegged growth in a recent survey.

He added: "Our own long-standing estimate of 6 per cent may also turn out to be conservative but for the moment we are happy to retain this view."

Alan McQuaid of Bloxham stockbrokers said the latest figures indicated that GDP would grow by at least 6 per cent this year.

The Central Statistics Office data shows that during the third quarter, €19.8 billion was spent on goods and services, compared with €18.4 billion during the same three-month spell in 2005.

Government spending was up almost €400 million at €6.4 billion.

Gross national product (GNP), which includes profits earned by multinationals, grew to €34.4 billion during the third quarter, from €32.6 billion the same three months of 2005.

The year-on-year increase was 5.4 per cent. Rossa White, economist with Davy Stockbrokers, noted that this was far slower than the 9 per cent increase recorded during the second quarter of the year.

Mr McQuaid predicted that GNP would grow by 6.6 per cent for the year as a whole.

He noted that "foreign income flowing into Ireland rose to over €42 billion in the first nine months of the year, a 35 per cent rise, against a 23 per cent increase in income paid to foreign holders of assets in Ireland".

The balance of international payments, the difference between exports and imports, showed a shortfall of €1.15 billion during the third quarter.

The Central Statistics Office also said that merchandise exports during the period were €21 billion, up €900 million on the same period in 2005.

Services exports grew strongly over the three months to hit €14 billion, €2.1 billion more than that achieved during the third quarter of 2005.