The construction sector is on course for another record year with the possibility of 100,000 houses being completed by the end of 2006, Bank of Ireland said today.
The latest edition of the bank's Irish Business Review is generally upbeat about the current climate and claims that soaring consumer spending is a result of higher incomes and not excessive borrowing.
According to Pat Gaynor, managing director of Bank of Ireland, Corporate Banking Ireland said: "At the halfway point in 2006, all indications are that the domestic economy continues to power ahead with steady growth in the first quarter in most of the key sectors of the economy.
Deal flow in Bank of Ireland Corporate Banking remains positive, and we are confident of maintaining that impetus and growth over the remainder of the year."
The pace of house building in Ireland continues at breakneck speed and looks set to break last year's record of 81,000 completions.
"According to our Economic Research Unit recent experience suggests that approximately 21 per cent of the full year total for completions take place in the first quarter of the year. On this basis we are upping our original forecast of 85,000 completions for 2006 to a possible bumper 100,000 for the year end," said Mr Gaynor.
The Irish consumer is also fuelling the boom as retail sales have remained buoyant this year. Bank of Ireland remains sanguine about the prospects for the retail sector which some fear could falter as consumers feel the pinch of higher credit costs.
But the bank insists that the main driver of retail sales is not borrowing, but household income growth, which is likely to rise by 9 per cent in 2006 following a 10 per cent increase last year.
But amid the positive commentary the bank sounds a warning about the challenge that higher energy costs are posing for Irish business .
Mr Gaynor said "Given the current and projected environment of rising energy prices, and the impact we have already seen this has had on the performance of a number of high profile Irish companies, treasurers and finance directors now need to utilise similar hedging instruments to limit their exposure to energy prices."