Irish investors are increasingly optimistic about the economy with economic sentiment at a four-year high according to the latest RaboDirect Investor Barometer.
Some 91% of Irish investors surveyed say they are now confident about the outlook for the Irish economy over the next three months, compared with 82% who were confident at the time of the last barometer (June 2014). An all-time low was recorded in 2010, when only 10% expressed confidence in the Irish economy.
Optimism in the global economy has dropped significantly, however, and is now down by 9%, with 76% of Irish investors now saying they are confident about the global economic outlook over the next three months (June 2014: 85%). Confidence among investors about their personal financial situation remains strong at 80%, down slightly from 81% in June.
Most investors remain favourably disposed to the global stock market with 63% saying they think there is value to be found in stocks (June 2014: 66%). This sentiment is reflected in investors’ preferred asset classes with 50% indicating a preference for equities, 25% preferring the safety of cash, 10% looking to bonds and 15% to property.
When asked which particular sectors investors would be watching out for over the remainder of 2014, 24% indicated the technology sector was of interest, 21% said the financial sector, 20% said sustainability-related investments, followed by investments in commodities (18%) and healthcare (17%).
Results show growing investor confidence in the Irish property market with 67% saying they would be confident about investing in Irish property over the next three months, up 7% since the barometer in June. The outlook for the global property market is less optimistic, however, with 57% saying they are confident in global property compared with 64% who were confident in June.
Killian Nolan, head of Investments at RaboDirect says: “There has been an almost continuous stream of good news coming out of the Irish economy. This is contributing to increased optimism among investors as reflected in the latest barometer results with confidence in the Irish economy at its highest point in four years.”
Nolan notes that in October the IMF doubled its growth forecast for Ireland in 2014 to 3.6% and expects the economy to continue to strengthen in 2015 with robust growth of 3%. This compares with growth projections by the Irish Government of 3.9% for 2015 at the time of the Budget. More recently, the EU Commission upgraded its growth forecasts for the Irish economy (November 4th) and now expects even more robust GDP growth of 4.6% this year and 3.6% in 2015. Forecasts are less optimistic for the euro zone as a whole, however, with the Commission cutting its growth forecast to 1.2% in 2015, down from 1.7% previously projected.
“Sentiment is less upbeat on the global front, where we’ve seen increased volatility in the markets. In the medium term, the outlook for the European economy is weighing heavily on investor sentiment, particularly on foot of a deteriorating outlook for the German economy,” says Nolan. “On the flip side, historically low interest rates set by the European Central Bank look set to remain in place for the foreseeable future and this will continue to be an important factor for investors, driving a search for better yields.”