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Dublin: 8°C Monday 29 November 2021

Pace of economic growth strong in 2018 as Central Bank forecasts another 154,000 new jobs

Things aren’t looking too bad.

Image: Shutterstock/Ovidiu Dugulan

THE CENTRAL BANK has today predicted that the Irish economy will continue to grow at a steady pace for the next three years.

In its fourth quarterly bulletin of 2018, the Central Bank said that we are heading towards full employment but that the risk of Brexit could cause the country’s growth to stagnate. 

The bulletin examines recent trends in the economy and provides the Central Bank’s forecasts for the Irish economy and its views on domestic economic policy issues.

Some of the headline findings in the latest report include: 

  • Domestic demand projected to grow by 5.6% this year (revised up from 4.4% in the previous Bulletin), moderating to 4.2% in 2019 and 3.6% in 2020.
  • Projections for the labour market continue to signal that the economy is moving towards full employment, although some extra capacity is possible through further inward migration and increased participation in the labour market.
  • This suggests an additional 154,000 jobs by 2020, with a new peak employment level of 2.35 million expected.

The Central Bank statisticians added that the evidence suggested an acceleration in the growth of some domestic investment sectors such as housing and non-residential construction.

Projections for the completion of new homes have also been revised. It is now expected that a total of 19,000 homes will be finished by this year, 24,000 in 2019 and 28,500 in 2020.

But then there’s Brexit. According to the bulletin “a disorderly Brexit would pose immediate challenges for the Irish economy and financial system”.

“While the decline in Irish economic activity would be just over half as severe as a scenario based on World Trading Organisation tariffs, the proposed arrangement would still have a significant negative long-run impact on Irish output and employment.”

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Mark Cassidy, Director of Economics and Statistics, said: “Today’s forecasts are for strong growth this year, moderating somewhat in 2019 and 2020. We expect more than 150,000 additional jobs to be created in the economy by 2020 and with consumer price inflation likely to remain subdued, significant gains in terms of real purchasing power can be expected.

“However, while this is all very welcome, Ireland must learn from past mistakes and be pro-active in guarding against boom-bust cycles, by building up buffers to limit the costs of future downturns.

“This is all the more important given the clear risks facing the economy. Compared to our European neighbours, we remain particularly vulnerable to potential shifts in the international tax and trade environment. The threat of a disorderly Brexit, which would have an immediate disruptive effect on the Irish economy, remains ever present, while our research shows that the impact of a more favourable or “soft” Brexit outcome would still hit Irish economic output, exports and employment.”

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