Davy is forecasting Irish GDP growth of 10% in 2021, a significant upgrade from its previous forecast of 4.8%.

For 2020, the brokers has pencilled in a growth forecast of 5.6%.

Driving the bullish figures are buoyant exports, a thriving multinational sector, and a less shallow contraction in the domestic economy year to date than previously expected.

Davy says the lifting of Covid-19 restrictions has been evident in credit/debit card spending, falling jobless claims, buoyant tax receipts and record PMI survey readings.

With vaccination continuing apace, Davy now expects Ireland’s indigenous sector to grow by 5.2% in 2021 vs 2.7% previously, with output returning to pre-pandemic levels by early 2022, faster than originally anticipated.

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Davy forecasts a fast recovery in consumer spending during the summer, reaching pre-pandemic levels by late 2021, in part due to the extension until March of government income supports.

The broker notes that in June 2021 household deposits had grown by 12% annually to €132bn, whereas loans from the banking sector were down 1.6% to €101bn, indicating a well of potential pent-up demand.

Core investment spending which contracted by 1.5% in 2020 is forecast to grow by 4% in 2021 and 7% in 2022, aided by an acceleration in housing completions. Davy expects house price inflation of 8% in 2021, slowing to 3.5% in 2022.

The government deficit is set to come in at €19.5bn in 2021, representing 4.7% of GDP. It will decline to 3.2% of GDP in 2022, Davy predicts.

By the end of 2021 outstanding government debt is forecast to total €242bn, rising to €252bn by the end of 2022.