THE ECONOMY is recovering faster than expected, according to a new report issued yesterday.

Bloxham Stockbrokers' Irish Quarterly Economic Outlooksays a number of indicators, including retail sales and purchasing managers' data, indicate the economy is recovering at a quicker pace than expected by most economists at the start of 2010.

Bloxham now expects the economy to grow by 0.5 per cent this year on a GDP basis, compared to its previous projection in March of a contraction of 0.75 per cent. The report suggests the fall in the euro is very encouraging for Irish exports as companies here benefit more than other euro zone nations from the currency’s weakness against the dollar and sterling.

“We continue to look for a stronger dollar and sterling in the coming months. A strong British pound will in particular boost Irish indigenous exports. Ireland will gain too from the fact that it has a higher percentage of its exports in services than any other western economy,” Bloxham says.

The stockbroker expects the export sector to lead economic recovery, but says the construction sector will continue to weigh on growth for some time.

It says house completions this year and next will be in the 10,000-15,000 range – well off the 93,000 peak in 2006. It also expects house prices to fall by a further 10 per cent this year.

Bloxham says prices and wages need to fall by another 10 per cent to make the economy competitive, but believes the jobless rate is close to peaking at about 13.5 per cent.