Davy upgrades GDP growth forecast for 2020 to 5.5%

Stockbrokers Davy have revised upwards their GDP growth forecast for 2020 to 5.5% from 4.1% previously.

Davy said the upgrade came on the back of strong foreign direct investment, expansion in the multinational sector and an exceptional export performance.

The new forecasts puts Davy well above official projections including the Central Bank’s estimate of 4.3% and the Department of Finance’s forecast of 3.9%. 

The stockbrokers also revised upwards their forecast for Irish GDP growth in 2019 to 6.2% from 5%

In its latest Irish Economist forecast, Davy said that exports are set to grow by 11% in 2019 and 7% in 2020, due to continued strong foreign direct investment levels. 

Davy also said it expects consumer spending to grow by 3.2% in 2020 and employment by 2.5%, with the
unemployment rate falling to 4.4% and the Budget surplus growing to 0.8% of GDP.

On Brexit, Davy said that the UK’s planned departure from the European Union uncertainty depressed the Irish indigenous economy in 2019.

The stockbrokers noted that about 50% of SMEs postponed investment plans and the pick-up in liquidity in the housing market was delayed. 

It also said that non-residential construction slowed sharply last year, with output in the distribution, transport and tourism sectors flat on the year. 

“Now that a no-deal Brexit cannot occur in 2020, we expect output in indigenous sectors to grow by 3.5% in 2020, slightly faster than the 3% in 2019,” Davy said.

It also said it expected house price inflation to rise slightly to 2% during 2020 from 1% in 2019. 

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