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IRELAND'S CONSUMPTION CLIMATE IMPROVES.

Europe Intelligence Wire

| January 01, 2004 | COPYRIGHT 2004 Financial Times Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

(From Market - Europe)

Several factors portend an improvement in Ireland's consumption climate during 2004, but a rebound in export sales will be needed to generate sustainable growth in commercial activity

The purchasing power of the average household is rising modestly, in part due to the appreciation of the euro against the dollar over the past year. Real household income should continue to rise during 2004 in a climate of low inflation and declining lending rates

During the third quarter of 2003, the inflation rate unexpectedly dropped below 3 percent and the rate could float even lower over the next few months. Consumer spending should experience growth of between 1.5 and 2 percent during 2003 and the growth rate should rise toward 4 percent by midyear 2004. Retail sales have been flat in recent months, but should achieve sustainable upward momentum by the middle of next year

Financed spending increased modestly this year but should rise at a faster pace as 2004 progresses. The downward trend in interest rates is making it possible to offer increasingly attractive financing terms on cars, housing, and major home appliances. Lower mortgage rates bode well for residential real estate sales. That should make it possible to sustain the upward momentum in housing values that has boosted the level of household wealth in recent years

Expenditure on the part of ...

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