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'Resilient' Ireland to see further economic growth next year but at a slower rate

Researchers say Ireland has held its own in the face of tensions between the UK and Europe, and China and the US.

Image: Shutterstock/Number1411

THE IRISH ECONOMY is forecast to grow further in the coming year despite uncertainties around Brexit and other global influences, according to the Economic and Social Research Institute (ESRI). 

The ESRI, an independent Irish think-tank, has today published its Quarterly Economic Commentary, Winter 2019, which examines the current economic outlook for Ireland for the final quarter of this year. 

It points to the uncertainty around Brexit and a trade deal between the UK and Europe when it leaves next year, as having an impact on the pace at which the Irish economy will grow.

However, economic growth will continue in Ireland, albeit at a slower rate of 3.3%, compared to the current growth rate of around 4.5%, according to researchersat the ESRI. 

Research professor, Kieran McQuinn explained the continued growth in spite of lingering uncertainties has been buoyed by a strong labour market and wage growth. 

“What we have seen is the Irish economy continuing to perform strongly in 2019 and this is significant given the uncertainty around the Brexit issue but also the global moderations. 

“The two factors we look at is the underlying performance of the labour market, so employment growth of 2.5%, and a drop in unemployment to below 4% which we haven’t seen in several years. 

“Then significant wage growth in the past while has influenced the economic growth,” McQuinn added. 

Earlier this year, CSO figures reported that the Irish economy grew by 8.2% based on Gross Domestic Product (GDP) output. 

Gross Domestic Product (GDP), a measure of the total output of the economy, stood at €324 billion for the year, according to the CSO.

Corporation Tax

However, McQuinn cautioned that this figure is not an accurate representation of economic growth, as corporate tax receipts from multinationals do not reflect the growth of the domestic economy and lead to “inflated headline figures”. 

They are also an unreliable source of income for policy-making and a reliance on those would require “significant measures to be adopted by the Government” in the event that those multinationals were to leave. 

“If you take these headline figures, they comprise the underlying economy and multinational activity. And a lot of multinational activity is real and has a real impact on the Irish economy in terms of jobs etc. 

“But in quarter two, this shows that investment grew by 200% but we all know it hasn’t grown by 200%. So the real economic growth rate is about 4.5% in real terms.”

As tensions rise internationally, particularly between the US and China, and the UK and Europe, Ireland has remained “resilient” and SMEs as well as multinationals have had opportunities to grow their businesses, McQuinn said. 

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