Financial analysts expect the Irish economy to continue to outperform the rest of the euro zone with property expected to deliver the best returns this year, according to a study.

The Market Sentiment survey of members of Chartered Financial Analysts (CFA) Ireland showed that 80 per cent expect both the Irish and global economies to grow this year, up from 50 per cent who predicted growth a year ago and a similar number in June's survey.

Fears elsewhere
But despite widespread fears elsewhere that prolonged government cutbacks are dampening growth in the Irish economy, almost three quarters of CFA members believe an increase in government spending is the biggest danger to growth.

"There's a clear view among our members that the recovery is fragile and would be jeopardised by an increase in government spending," said Ronan McCabe, the president of CFA Society Ireland.

Low interest rates
CFA members also expect interest rates to remain low for the next few years, which would be a boost to homeowners if true. Almost three quarters of those surveyed said they expect euro zone inflation to remain below 2 per cent, while half said the main European Central Bank rate – the main rate used to calculate mortgage rates – will still be below 1 per cent in three years time.

“This indicates a strong view among CFA members that the euro zone economy is going to struggle over the next few years,” said Mr McCabe.

“A majority also believe that Irish inflation will be between zero per cent and 2 per cent although there is a growing view that domestic inflation may rise above 2 per cent, a reflection on the strong positive sentiment on Ireland’s growth prospects,” he added.

CFA members believe Irish property will provide the best returns for investors this year, followed by equities and bonds.

About a third felt Irish bonds will outperform global bonds in 2014.