THE economy will be even more buoyant this year than during 1995, according to Goodbody stock brokers. Goodbody, which yesterday published its Investment Strategy 1996, is predicting GNP growth of 8.5 per cent this year while it estimates that GNP grew by 8.1 per cent during 1995.
The only risks to the projected growth, according to economist Mr Hans de Jong are the possibility of a major recession in Europe or a major recession in the global micro electronics sector. The growth will be fuelled by an acceleration of private consumption and a continued boom in exports.
Goodbody predicts that the Exchequer Borrowing Requirement will rise to £775 million, and will come in below target, but that the tax cuts in this month's Budget will disappoint.
Inflation is set to remain low (2.5 per cent) well into this year, but will increase to about 3.5 per cent in 1997. Real earnings will increase by between 0.5 per cent and 1 per cent while employment is expected to grow by between 4 per cent and 4.5 per cent.
The pound is expected to rise to 105p sterling by the end of the year, while the dollar will be strong, pushing the pound/dollar exchange rate from its current $1.60 to $1.48 by the end of the year.
Mr de Jong said there were a number of reasons why the Irish economy was performing well despite weaknesses in most major economies. These included the impact of European Union structural funds, the impressive performance of the inward investment sector, and the continued impact of the 10 per cent devaluation.
