Washington: Rating firm Fitch raised its outlook on Ireland to ‘positive’ from ‘stable’, citing the euro zone country’s strengthening economy after exiting an international bailout in 2013.
Fitch highlighted that tax revenues increased by 11.7 per cent in the first half of 2015 compared with the same period a year ago, notably on strong corporate tax receipts. Revenues from VAT and personal income tax grew 8pc and 6pc, respectively.
Ireland also benefited from a low interest rate environment which has allowed it to make ahead of schedule an 18 billion euro ($19.7bn) repayment of its International Monetary Fund loan, resulting in interest savings, the rating firm said.
“The economic recovery has broadened since our last rating review in February,” Fitch said. Household consumption has “strengthened significantly” and consumer confidence, employment growth and other data support the view of the rebound.
Fitch said it was increasingly confident that Ireland’s budget deficit will fall below 3pc of gross domestic product (GDP) this year and the country will reach its first primary surplus – government spending less tax revenues and excluding interest paid on debt – since 2007.
The country also was benefiting from the European Union’s asset-purchase program, a weaker euro and lower oil prices, it said.
Debt was expected to drop from 107.6pc of GDP at the end of 2014 to below 100pc by 2018.
Fitch forecast economic growth would slow from 4.3pc in 2015 to 2.4pc in 2016 and 2.2pc in 2017, near what it sees as the Irish economy’s growth potential around 2pc in the medium term.
Fitch also affirmed Ireland’s ‘A-’ credit rating, highlighting new upgrades on the ratings of Ireland’s three largest banks: Bank of Ireland, Allied Irish Bank and Ulster Bank Ireland.
GDP grew by 5.2pc in 2014, making Ireland the fastest growing economy in the 28-nation EU, according to official data released in late July.
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