Irish Q2 GDP data released today showed an increase of 1.5% q/q and an astonishing 7.7% y/y. This is the highest year-on-year reading since Q1 07 - before that we have to go back to Q1 01 for a higher print. GNP increased by 0.6% q/q and 9.0% y/y.
The change was mainly driven by strong domestic demand. Private consumption increased 0.3 % q/q, government consumption increased 3.8% q/q while investments surged by 9.1% y/y. Net exports also contributed positively to today's strong figure. Before today's print, the consensus expectation for 2014 growth was just 2.5% - this will soon be revised up. On the back of today's strong print, we are revising our 2014 GDP forecast up from 4.0% to 5.0%.
Irish Finance Minister Michael Noonan said following the release that he now sees 2014 GDP growth at +4.5% versus the previous forecast of 2.1%. Noonan sees average growth 'settling' at 3% pa for the next five years.
On public finances, Noonan stated that that the budget deficit is set to drop to 3.5% of GDP versus the 4.8% target.
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