The rate of growth in the Irish economy will slow in 2008, according to stockbroker Davy but it predicts a bounce back the following year.
Difficulty in the property market and marked slowdown in the economy in the later months of 2007 will weigh heavily in 2008, slowing growth to 2.1 per cent, it said.
Although the GNP growth rate for 2007 was running at more than 5 per cent, with an average year on year growth of 5.9 per cent for the first nine months, there was a marked slowdown in later months.
New housing output fell 8.8 per cent in the first three quarters of 2007, as the difficult conditions in the property market continued. However, strong consumer spending, non-residential construction, exports and spending on home improvement helped support the economy during the year.
Despite the pessimistic outlook, Davy is optimistic that the economy will return to growth rates of between 3 and 4 per cent once the correction in the property market is complete, and anticipates GNP growth of 3.8 per cent in 2009.
The labour market is also feeling the effects of the economic slowdown, with jobs growth slowing despite unemployment remaining stable at about 4.4-4.5 per cent.
Updated data from the Live Register has indicated that this rate is on the rise, however, with an extra 5,000 people on the Live Register in November bringing the rate to 4.6 per cent.
Davy said growth in overall employment will slow to about 1 per cent by the end of this year, while unemployment is expected to peak at about 5.5 per cent towards the end of 2008.
