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esri report

What's forecast for 2018: More jobs, more spending and higher wages

The optimistic outlook comes as the government prepares to announce Budget details for 2018.

THE FORECAST FOR 2018 looks good for Ireland, with the number of permanent jobs predicted to increase, and in turn, propping up an increase in customers’ spending.

Ahead of next week’s Budget announcement, the Economic & Social Research Institute (ESRI) has predicted that Ireland’s financial growth is expected to continue increasing.

Ireland’s GDP growth, a rough measurement for the country’s economic state, is forecast at 5% in 2017 and 4% in 2018.

In layman’s terms, the ESRI are predicting:

  • Unemployment will average out at 6.1% in 2017 and 5.4% in 2018
  • Part-time positions will replace full-time positions “at an accelerated rate”
  • There will be an increase in customer spending with “a strong forecast” for household spending in particular
  • Increased investment in the construction industry will continue into 2018 according “to a variety of indicators”.

As employment opportunities increase, wage growth has also intensified: “rising four times faster in the period between Q2 2016 and Q2 2017 compared to the same period in the previous year”.

But the ESRI has previously warned that Celtic Tiger mistakes could be repeated if the government isn’t careful – in March it said that the overproduction in the construction sector could potentially cause the economy to overheat if production outpaced demand.

“If unemployment were to fall below 5.5% this would almost certainly confirm that the domestic economy is overheating,” the report said.

The ESRI’s research professor Dr Edgar Morgenroth notes something similar in this report: that investment must be introduced in a regionally balanced manner, and ill-advised plans may run the risk of increasing construction prices further.

Another report indicated that Ireland’s economic output would be greatly affected by a so-called “hard Brexit” and that it would hit fiscal space by up to €500 million over three years.

Author of the study, Professor Kieran McQuinn said that “the key challenge for the government is how to transition the economy from one enjoying elevated rates of economic growth, to a more stable period of sustainable activity over the medium-term.”

Read: One month out from the Budget, what can we expect?

Read: A ‘hard Brexit’ could hit Ireland’s budget to the tune €500 million over three years

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