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Malin expert predicts housing recovery 09.11.07

A MALIN-born financial expert believes house prices will recover after next year. Dr. Dan McLaughlin, chief economist of Bank of Ireland, predicts a slowdown in 2008 as the booming construction industry cools. But he believes growth will return to the market in 2009. He makes his forecast in the bank's Quarterly Economic Outlook and believes the economy will grow by 4% in 2008 before recovering to 5% in 2009.
Dr. McLaughlin predicts that house completions nationally will decline to 72,000 this year from over 88,000 in 2006. Completions are expected to further decline to 58,000 next year. He believes, however, that these declines are ultimately "supportive of house prices" and he predicts a rebound in the market in 2009.
The review, meanwhile, sees consumer spending growing by 4.5% in 2008, after 6% growth this year.
Dr. McLaughlin predicts that wages will be supported by a sharp fall in inflation next year and that the European Central Bank
Dr. Dan McLaughlin, chief economist of Bank of Ireland.
will make two interest rate cuts in the second quarter of 2008. This will put more money into people's pockets.
The Malin man said the figures did not support a severe December budget from Finance Minister Brian Cowen.
"The Minister has announced a spending total for 2008 which is virtually identical to that signalled 12 months earlier and tax revenue is forecast to exceed day-to-day spending by 6.06 billion. "This hardly suggests the need for revenue-raising measures," he said.
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