DAVY VIEW

We are updating our economic forecasts for 2025 and extending the horizon out to 2026. Available details for this year indicate that growth momentum has picked up, helped by rising real household incomes as inflation declined and wages grew. Construction sector activity has also recovered from a lull in the early months of this year. Into 2025 and 2026, we expect strong economic growth of above 4% a year to continue despite an escalation of downside risks. Some rebalancing of growth is likely, with a significant pick-up in housing and other capital investment likely to offset a slowdown in growth driven by labour income.