Davy expects a broad-based acceleration of economic growth. Gross National Income (GNI) which represents the total income earned by a country’s people and businesses, regardless of where it was earned, is expected to grow by 4.5% in 2024 and 4.3% in 2025 – from an estimated 3% growth in 2023. This forecast is underpinned by employment growth of 2% a year and a significant increase in housing output.
Commentary:
The Irish economy accelerated into 2024 and is on the cusp of rapid growth, helped by lower inflation. Foreign direct investment (FDI), high-skilled job creation and a rising population underpin the economy’s resilience. Buoyant activity levels have put pressure on Ireland’s infrastructure. Priorities for capital spending include housing and decarbonisation. Threats to competitiveness must be tackled to avoid a slowdown in FDI and job creation.
Demand in the economy is strong and inflation could be reignited if another expansionary Budget is delivered this year. Davy expect continued Budget surpluses this year and next. Further ahead, funding levels will rise due to higher debt rollovers, increased investment and the costs of an ageing population.
Population growth:
Davy expects the population to reach 5.9m by 2030, which would be 524,000, or 10%, ahead of the National Planning Framework (NPF) baseline of 5.36m.
In a “high migration” scenario, the NPF expects a population of 5.5m by 2030 and close to 6m by 2040. Davy therefore expect the population to reach 6m nearly a decade faster than the “high migration” scenario in the NPF. This forecast has significant implications for housing demand over the coming years.
Housing:
Davy forecasts an increase to 36,000 new dwelling completions this year and 42,000 next year. However, this remains well short of their estimate of underlying housing need.
Closing Ireland’s per-adult housing shortfall compared to other European countries based on the projections above would require just under 85,000 units a year until 2030, or 2.6 times the 2023 level of completions.
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