The ESRI in conjunction with Nationwide recently reported that confidence amongst Irish savers is now at a 5 year high. Confidence is most notable amongst savers under 50 years of age.
This encouraging data corroborates the ESRI’s Consumer Confidence Report which shows that confidence amongst Irish consumers is now nearing the same levels as experienced at the height of the boom, back in 2006.
In 2008 consumer confidence stood at a low of 40. What has evolved since 2008 is quite extraordinary and has resulted of small incremental monthly upward changes has resulted in consumer confidence being over 100.
The fact that consumers are now 2.5 times more confident about the future of the Irish economy and their own household finances augurs well for the future growth in the Irish economy. In its simplest form as confidence increases, spending increases and employment increases (especially in the retail and construction sectors). This positive trajectory continues assuming that there are no shocks to the economy that could potentially spook consumers.
Potential shocks could come in the form of our largest European partner, Britain, leaving the EU. Another potential shock is a rapid slowdown in the global economy as Ireland is an export led economy. A dramatic increase in the value of the Euro would make Irish goods and services much more expensive in the US and Britain, having a negative impact on exports and ultimately job creation.
However the Irish economy is now positioned in a very healthy growth mode and will achieve the highest growth rate in the Eurozone in 2016, if all economic predictions come to fruition.