Unemployment will drop below the psychologically important 10pc level next year while the economy will grow at a faster pace than previously predicted, economic think-tank, the ESRI said today.
It prefers to use GNP as a measure of economic strength and its latest forecast predicts that this will grow to over 3.5pc both this year and next.
Speaking about the latest Commentary, Dr David Duffy (ESRI) said "GNP continues to provide the best measure of the standard of living (and output) of Irish residents. We are expecting growth in GNP in 2014 of 3.4 per cent and growth in GNP of 3.7 per cent in 2015. Further declines in unemployment are forecast, with the headline rate envisaged to fall to 9.8 per cent in 2015."
He continued "While the outlook for the economy is positive, the weak growth prospects for the euro zone are a concern. Domestically the particularly low rate of investment, the high rate of unemployment and the weak levels of credit being extended remain as issues to be addressed."
In further comment, Dr Kieran McQuinn (ESRI) said "Despite the strong increases in house prices observed of late, particularly in the Dublin area, house prices in the Irish market still appear to be undervalued. At present, there is no sign of a "bubble� in the domestic market and any recovery occurring at this point is almost a "credit-less� one. Much of the upward pressure on house prices is due to the slow supply response. The focus of housing market policy should be to address this issue."
Looking at house prices, the ESRI said that there is no Dublin "bubble" as conditions remain vastly different to that which existed in the 2000's.