3.5% GDP Growth Forecast for 2017
The ERSI forecast GDP growth at 4.2 percent for 2016, and 3.5 percent for 2017 in the Quarterly Economic Commentary for Winter 2016, published on Thursday. The report notes that the GDP forecasts have been revised downwards since the beginning of the year, largely as a result of the Brexit referendum and other potential trade-related uncertainty.
The author of the report, Kieran McQuinn, commented, “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.”
The report predicted robust consumption and investment growth in 2017, noting that 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 report also predicts that the unemployment rate will reach 6.8 per cent by the end of 2017, and consumption should grow to 3.5 percent.
“Given the strong rates of productivity growth and falling levels of unemployment in the domestic economy, it would appear that the Irish economy is at or is very near to its potential level of output,” McQuinn said. “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.”
