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Ireland's GDP to grow at 4.2 percent in 2016, 3.5 percent in 2017

Xinhua, December 15, 2016 Adjust font size:

Ireland's overall economic growth is expected to be robust in 2016 and 2017, with forecasts of GDP growth of 4.2 percent and 3.5 percent respectively, according to a leading think tank on Thursday.

In its Quarterly Economic Commentary, the Economic and Social Research Institute (ESRI) said these forecasts have, however, been revised marginally downwards since the beginning of the year, largely as a result of the Brexit referendum and other potential trade-related uncertainty.

It added that uncertainty surrounding Brexit and the weakening of sterling are likely to hinder Irish export growth in 2017.

The ESRI attributed the continuing growth to domestic sources, saying that domestic sources of growth remain "relatively robust".

The building and construction components of investment have picked up in recent quarters and should continue to grow into the new year, resulting in approximately 17,500 housing completions in 2017. The labor market continues to improve and the unemployment rate is expected to reach 6.8 percent by the end of 2017.

Although the consumer sentiment index has not increased in recent months, the figure remains above the long-term average, according to the ESRI.

"The combination of the above factors, combined with a muted inflation forecast, is likely to support strong consumption growth of 3.5 percent in 2017," it said.

Kieran McQuinn, the ESRI research professor, said the outcome of the Brexit referendum was the most significant international development for the Irish economy in 2016.

"It is increasingly apparent at this stage that it may take some time before the necessary trade arrangements are concluded. Until that happens, variables such as exchange rates, stock market returns, producer and consumer sentiment may continue to display heightened volatility. This, inevitably, impacts on our assessment of the trade performance of the Irish economy," he said.

McQuinn said the Irish economy is at or is very near to its potential level of output, thanks to the strong rates of productivity growth and falling levels of unemployment in the domestic economy.

"From the public finances perspective, the most significant outcome of the recent growth performance is the likelihood of a close to balanced budget in 2016, with the prospect of a modest surplus in 2017 under current budgetary policy," he added. Endit