Weak exports depressed Gross Domestic Product (GDP) in the first three months of 2005, according to a Reuters survey, but overall the economy remains strong and the stock market looks set for new record highs.
First-quarter GDP data, which are due for release tomorrow, are now expected to show growth of 4.5 per cent year-on-year according to the median forecast of Dublin-based economists who last month had seen a 5.4 per cent rise.
The Reuters poll of 10 analysts published today showed they remain upbeat for the year as a whole and still expect the economy to grow by 5.85 per cent this year but believe subdued exports will have dampened first-quarter growth.
"Import volumes were strong but exports barely increased according to our estimates," said Rossa White of Davy Stockbrokers.
Oliver Mangan, chief bond economist at AIB Global Treasury, said he reckoned the value of Irish exports had slipped to just under €19.5 billion ($23.5 billion) in the first three months of 2005 versus €19.9 billion in the same period last year.
He calculated that, in contrast, imports rose to €12.4 billion in the first quarter from €11.7 billion last year.
"There are also likely to be substantial revisions to historic national accounts data which could impact on the first-quarter figures," Mr Mangan said, adding he would not change his full year forecasts before then.
"GDP figures in Ireland can be very volatile. Until you actually see the national accounts you're really groping around in the dark." The economists in the poll also expect data to show Gross
National Product (GNP) grew by 4.1 per cent between January and March, which is also weaker than the 5 per cent annual rate they had predicted in last month's survey.
Looking ahead to the rest of the year, however, economists said strong domestic demand meant they saw no reason for Ireland to worry about its status as one of Europe's fastest growing economies, with GNP still seen growing 5.3 percent in 2005.
"The growth dynamic remains strong in the economy," said Jim Power, chief economist at Friends First. "The persistent low level of interest rates and the weaker euro will support
activity in the second half of the year."
A pick-up in government spending as the year progresses is also likely to provide support, he added.
Despite the positive outlook, inflation pressures this year are expected to remain subdued, with the consumer price index (CPI) still seen gaining 2.2 per cent this year.