Updated at 5.03pm

IRELAND’S ECONOMY IS expected to hit its pre-recession peak this year – eight years after the nation’s finances started to plunge into a devastating downward spiral.

Davy Research has predicted the country’s final GDP growth figure for 2014 would be 4.8% and the tally this year would be 3.7%.

That would mean Ireland’s total economic output returned to its 2007 peak again this year – one year earlier than Davy had predicted in mid-year forecasts.

It also expected unemployment to average 9.6% this year before falling to 7% in 2017.

In contrast, Ireland’s official jobless rate in 2007 was below 5% – which represents what is considered to be full employment.

That year general government debt stood at €47 billion – or 24% of GDP – compared to the current figure of €203 billion, about 111% of GDP.

All sectors performing again

In a report today, Davy chief economist Conall Mac Coille said the better-than-expected growth forecasts came from the country’s strong export performance – with IT, pharmaceuticals and domestic producers all doing well.

And we expect that Ireland will continue to compete effectively for foreign direct investment despite the end of the ‘double-Irish’ tax structure,” he said.

The government announced in last year’s budget that it was phasing out the controversial loophole, instead putting in place a “knowledge-development box” to give tax breaks for research and development.

It recently predicted the country could return to full employment by 2018.

Catching up this year

Mac Coille said Ireland’s economy should catch up with the eurozone again this year and move ahead in 2016 when compared to pre-recession outputs.

Davy Research Davy Research

But the country’s Gross National Product (GNP) – which many consider a more-accurate indicator as it strips out multinationals’ outputs that flow offshore – is still expected to lag behind the headline GDP figure over the coming years.

Mac Coille said many “hard-hit, domestic-facing sectors” needed to bounce back and supply problems in the construction industry could hold back further growth.

But he said the Central Bank’s new mortgage rules, announced last week, were not expected to have any impact on the Irish recovery.

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