Leading indicators continue to signal strong growth in Ireland and, according to our models, we should brace ourselves for a strong rebound when Q1 GDP data is released next week. We expect a jump in GDP of 1.6% q/q (2.3% y/y).
Hard data continues to improve with industrial production up 10.6% y/y in April. Retail sales are trending upwards with the latest April print up 6.8% y/y. Car sales have surged around 25% since bottoming during 2013.
Leading survey data indicators are also signaling strong growth. Service PMI is still hovering above 60 while manufacturing PMI at 55 is close to the pre-crisis highs. Consumer confidence has jumped recently, signaling that private consumption also will contribute to positive growth in 2014.
Furthermore, we expect some payback after a very poor Q4 print. GDP dropped 2.3% q/q in Q4 while the alternative measure GNP was significantly better, showing an expansion of 0.2% q/q. The drop in GDP was solely driven by a large increase in imports implying that net exports took almost 2.5% off the quarterly growth rate. The quarterly drop was related to high imports from the Pharma industry and we expect it to have been a one-off.
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