The IBEC’s October publication on economic trends states that Irish economic growth in recent years has been overly dependent on domestic demand, in particular, on residential construction and that the economy will soon enter a period of “correction”.
The eight-page document adds that any rebalancing of Irelands economy will require tight management due to uncertainty caused by the recent sub-prime loan disaster in the US. It does however predict continued growth in the Irish economy but suggests a “slow” in GDP growth to 3.5 per cent in 2008, with a shortfall in the Ex-Chequer's expectations of €1 billion.
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The publication states: “We now estimate that total house completions in 2007 will fall by 16% to 74,000 units. The registrations data offer little optimism for 2008 and at this stage we are forecasting a further fall in completions of 20%.”
The trend will mean a fall in stamp duty revenue, capital gains and VAT. In response, the IBEC implores the Irish government to be prudent whilst maintaining its present programme on infrastructure development to continue growth.
Adding injury to insult for the construction sector, the document continues: "The commercial buildings sector is likely to weaken somewhat to mirror overall growth rates in the economy but total output in the ‘other building and construction’ sector should average 15% in 2007 and 12% in 2008."
(DW)
