Investment growth to pick up this year

First quarter GDP growth is shaping up to be weak again this year, but one bright spot is likely to be a big increase in investment. The rebound in oil prices, continued recovery in the housing market, and a big turnaround in business investment means that private fixed investment expanded by as much as 7% annualised in the first quarter. Prospects for the rest of the year look bright too. Admittedly, hopes that tax reform and deregulation will generate a significant pick up in investment look misguided. But stable oil prices, rising house prices and diminishing spare capacity mean that investment should grow strongly this year. That is a key reason why we expect GDP growth of 2.3% this year compared to 1.6% last year.