Industry & Business

ESRI Publishes Medium-Term Outlook for the Irish Economy

 Breaking News
  • Grand Canal Innovation District Planned For Dublin A far-reaching plan for the creation of the Grand Canal Innovation District in Dublin has been launched. The proposal from Trinity College Dublin is modelled on innovation districts in cities such as Boston, Toronto, Rotterdam and Barcelona. It will significantly strengthen Ireland’s competitive advantage when developing new indigenous companies or competing for foreign direct investment. [...]...
  • Heiton Buckley Unveils Newly Refurbished Mayo Branch Heiton Buckley, Ireland’s leading supplier of doors, floors, bathrooms, garden, plumbing and heating products, has officially unveiled its newly refurbished branch in Castlebar, County Mayo . GAA star, Andy Moran, CEO of Grafton Merchanting ROI, Patrick Atkinson, Heiton Buckley Castlebar Branch Manager, Mick Kane, and longtime customer Mick Duane officially cut the ribbon and kicked [...]...
  • Export Sales by Enterprise Ireland Client Companies Hit New Record Enterprise Ireland, the state agency responsible for helping Irish companies export to international markets, has announced that its clients recorded export sales of €22.71 billion in 2017, representing a 7 per cent increase on 2016. This is the highest level of export sales recorded in the history of the agency and the eighth-consecutive year of [...]...
  • BAM Wins €25 Million Contract to Build New Cheese Factory in Cork TINE Ireland, a subsidiary of the Norwegian dairy co-operative TINE, has awarded the construction of a new Jarlsberg® cheese production facility and administration building at Mogeely, County Cork, to BAM Ireland. The contract value is more than €25 million. TINE is Norway’s largest producer, distributor and exporter of dairy products with 11,400 members (owners) and [...]...
  • HBAN Scoops Major European Business Angel Network Award HBAN (Halo Business Angel Network), the all-island organisation responsible for the promotion of business angel investment, and a joint initiative of Enterprise Ireland and InterTradeIreland, was crowned Globally Networked Organisation 2018 at the recent EBAN (European Business Angel Network) Awards Ceremony held in Sofia, Bulgaria. HBAN was awarded the prominent European accolade in recognition of the significant [...]...

ESRI Publishes Medium-Term Outlook for the Irish Economy

ESRI Publishes Medium-Term Outlook for the Irish Economy
December 06
12:41 2016

The Economic and Social Research Unit (ESRI) published a medium-term outlook for the Irish economy on Monday, December 5. Called “Ireland’s Economic Outlook: Perspectives and Policy Challenges”, the research uses a new macroeconomic model, COSMO (COre Structural MOdel of the Irish Economy), developed by the ESRI to determine the potential path of the Irish economy in the medium to long term future.

The research used COSMO to create a baseline projection for the Irish economy that acts as a benchmark against which a number of scenarios can be examined. The projection relies on a set of assumptions relating to demographic trends, the world economy and the public finances.

The baseline projection, which extends to 2025, predicts that the sustainable long-term real growth rate of the Irish economy is approximately 3 percent, driven mainly by growth in the traded sector. A key factor underpinning this growth is the continued expansion of the labour force, which is expected to increase by close to 2 percent yearly. This growth is supported by the natural increase in the working-age population together with increases in female participation and a return to net immigration.

Strong labour demand is expected to reduce the unemployment rate to just over 6 per cent over the medium term while inflation is expected to remain relatively low at under 2 per cent per annum.

Results were also produced for a number of possible Brexit scenarios, depending on whether the UK remains within the EEA or is subject to WTO rules. Researchers examined the potential macroeconomic implications of opportunities and threats to FDI flows and the associated impact on revenues based on two scenarios: Diversion of investment from the UK to Ireland following a UK departure from the EU and;  major alteration of tax rules across Europe.

In the case of a diversion of investment from the UK to Ireland following a UK departure from the EU, the research found that Ireland might benefit from a substantial relocation of FDI from the UK, however the size of this positive effect is dependent on the level of global demand. Under these conditions, a simulation based on COSMO finds that real GDP will increase by 3 percent and employment will increase by 1.8 percent. However, where investment is not accompanied by a shift in demand to Ireland, the effect on output and employment would be negligible.

In the case of a major alteration of tax rules across Europe along the lines of the proposed Common Consolidated Corporate Tax Base. The proposal, which could affect both revenue and the attractiveness of Ireland’s low corporation tax rate as it would apply to a smaller proportion of a multinational company’s income, is estimated to result in Irish potential output being 1.5 per cent lower than the baseline.

The research also assessed likely future demand for housing based on projected demographic change and related financing requirements within the Irish banking system. The results indicate that there is likely to be an increase in demand for housing from the current level of 23,000 units per annum to just over 30,000 per annum in 2024. The increased credit levels associated with providing 30,000 units is likely to pose challenges for the domestic banking sector. It is likely to result in a significant increase in the difference between credit levels and domestic deposits, which is commonly referred to as the “funding gap”.

The full report can be found here.

About Author

editor

editor

Related Articles

New Subscriber





Subscribe Here



Advertisements



















National Manufacturing Conference & Exhibition 2018

NIBRT Springboard Success Stories



Upcoming Events

  • No upcoming events
AEC v1.0.4