Consumer spending continues to grow at a "healthy pace" and is set for growth of 6.7 per cent next year, particularly with the bulk of €16 billion SSIA funds yet to be released Goodbody Stockbrokers has said.
In its bulletin today, Goodbody noted retail sails in August grew at an annual rate of 5.7 per cent, a slight improvement on the July outturn of 5.3 per cent.It attributed the moderation in growth to a slowdown in vehicle sales.
Goodbody said it believed much of SSIA monies were "earmarked" for new cars, but that the effects were not likely to be seen until the release of 2007 registration plates.
Other areas of consumer spending, in particular clothing and footwear, are up strongly, Goodbody said. And the stockbroker said it is clear that discretionary spending appetite remains "quite strong" despite the high level of price increases in the last year.
We are currently forecasting an increase of 6.7 per cent in real consumption spending in 2006. On the basis of the evidence we have thus far, this looks to be well on course."
Davy Stockbrokers, meanwhile, has upped its GNP growth prediction for 2006 to 6.5 per cent from 6 per cent after the publication of the second-quarter national accounts.
Davy said it based its optimism on three broad pillars - the strength of the consumer, a much more favourable fiscal stance than exists elsewhere and "exceptionally strong" demographics.
In its weekly bulletin, the stockbroker estimated the Government will end the year with a surplus of €1.6bn on the General Government Balance (GGB).
"That would allow it to introduce a Budget every bit as generous as last year and still target a GGB deficit of €1.5bn in 2006. That is less than 1 per cent of GDP, would still be amongst the lowest deficits in the EU and would result in another fall in the debt/GDP ratio," Davy said.