Has the “Celtic Tiger” been re-born?

New CSO figures show that Ireland's economy grew by 7.8% last year...

Has the “Celtic Tiger” been re-born?

Gareth Fuller / PA Archive

Ireland's economy grew by 7.8% during 2015, according to official figures from the Central Statistic Office (CSO).

This makes the Irish economy the fastest growing in the EU - and is the fastest rate of growth recorded in Ireland since 2000.

In an analysis note for Merrion Stockbrokers, economist Alan McQuaid, he says that there "appears to be no let-up in the Irish economic growth story, with all the signs that the “Celtic Tiger” has been re-born."

Interestingly the increase in the GNP was 3.4% year-on-year, while corresponding GDP figure, which includes the impact of multinationals was 2.7%.

Mr McQuaid highlights the fact that strong consumer spending and international trade are fueling growth:

"With consumer confidence hitting a ten-year high, personal spending posted its best performance last year since the “Celtic Tiger” era, up 3.5% on average. On the external side of the accounts, exports were up 3.4% in the quarter. On a year-on-year basis, exports of goods and services rose 15.6% while imports increased 15.2%," he writes.

The economist adds that the outlook is positive for the rest of 2016:

"Already the indicators for the early part of 2016 point to another very good year ahead for the Irish economy despite some global-headwinds. At this juncture, we expect GDP growth of somewhere between 5.0% and 6.0% in real terms this year, again the best performance in Europe."

A British exit from the EU is highlighted as the main threat to economic growth. He adds that it is important that a Government is formed soon to ensure political stability.

However, both the Irish Fiscal Advisory Council (IFAC) and the International Monetary Fund (IMF) have raised questions over Ireland's headline growth figures in the past because of practises such as 'contract manufacturing.' This is economic activity which only takes place in Ireland on paper, often for tax avoidance purposes.

Dr Donal Donovan of the IFAC said in late 2014 that Irish growth figures should be taken with a 'pinch of salt.'