2017.09.1808:58:00UTC+00Ireland Economy Likely To Grow Quickly: Capital Economics

Reliable indicators suggest that Ireland's economy is likely to expand more quickly in the coming quarters of this year, although national output only partially rebounded in the second quarter, Jack Allen, an economist at Capital Economics, said.

Gross domestic product advanced 1.4 percent sequentially in the second quarter, reversing a 3.5 percent contraction in the first quarter, official data revealed on September 15.

On an annual basis, economic growth accelerated to 5.8 percent in the second quarter from 5.2 percent in the preceding quarter.

"The data are notoriously unreliable as a measure of domestic activity", the economist noted.

Due to various statistical distortions, both the GDP and GNP data are a poor guide to actual developments, Allen added.

The Central Statistical Office, or CSO, for the second time published 'modifies total domestic demand, which is intended to better measure activity in the domestic economy.

Based on this measure, the economy expanded 4.5 percent following March quarter's 5.6 percent contraction, the economist noted.

"Abstracting from the forces that have distorted the national accounts, the Irish economy seems to be doing reasonably well, the economist pointed out.

Indeed, consumer confidence is high, reflecting August's decline in unemployment and rising wage growth.

Besides this, the Composite PMI points to annual growth in modified total domestic demand of close to 6 percent.

"The upshot is that we continue to expect Ireland's economy to grow fairly quickly," Allen predicted.

That said, Capital Economics does see risks to the outlook and cautioned about risks in the near future, as the EU and UK still seem to be far from an agreement on the border arrangement between Northern Ireland and the Republic.

"While we suspect that both the UK and Ireland will continue to perform well after Brexit, the eventual system of border checks could have a significant impact on trade.