Yesterday the European Commission released its latest projections for the EU economy, and is predicting strong growth for Ireland over the next two years. Real GDP growth in 2014 is forecast at 1.8%, as economic recovery in Ireland’s key trading partners is expected to sustain positive export growth, particularly for services, while further improvements in the labour market and a rise in investment, from low levels, should support domestic demand. <p>
Growth is forecast to rise further in 2015 to 2.9%, on foot of a stabilisation of domestic demand and better net trade as conditions improve in key export markets. However, the Commission warned that the lack of wage pressure, while beneficial to competitiveness, heightens the challenge of reducing private sector indebtedness, which, although on a gradual downward path, continues to weigh on growth. <p>
<b>A stronger contribution from investment to growth will depend on improvements in the supply of new credit, especially to SMEs and to the construction sector, for which output must begin to rise in centres of economic activity in order to satisfy medium-term housing and commercial property demand.
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