Central Bank Predicts Healthy Economy In 2006

Noting the generally favorable international background, the Central Bank is predicting a growth in Gross National Product (GNP) of 5 1/2% for 2006.

This rate of growth is similar to that seen last year and is said to be close to the economy's projected growth potential.

The Central Bank is also forcasting similar growth in 2007, with unemployment projected to remain about the same at 4-4 1/2%.

It's not all good news in the report though, the Central Bank noting that the strong domestic demand of the last few years - that has fed the growth in the economy - could be levelling off.

The bank is also concerned about the sharp rises in house prices, though they note that they show signs of levelling off. Higher interest rates and an greater number of available properties seem to be moderating house price increases.

Export performance is given poor marks by the bank, which points out that the growth in Irish exports is consistently lagging behind the growth in Irish export markets - perhaps indicating a decline in competitiveness relative to Ireland's trading partners.

As a result, the bank emphasises that wage and price pressures must be carefully controlled.

The bank is also concerned at the rise in Ireland's inflation rate in the past year.

It also warned of the risks posed to the world economy from the United States' large budget deficit or the cooling of the U.S. housing market.