Ibec, the group that represents Irish business, today published its latest Quarterly Economic Outlook (attached), which forecasts growth of 4.2% for 2017, and 3.2% in 2018. A strong labour market, in particular, will underpin the buoyancy of the domestic economy, but Brexit related trading challenges will remain for exporters. This will be a particular challenge for the regions, with Ibec analysis showing some counties are five times more reliant on Brexit exposed industries than Dublin.
Ibec's Head of Tax and Fiscal Policy Gerard Brady stated: "The Irish economy is now in a strong position with forecasts showing the pace of employment growth will run above 3% this year for the first time since 2007. All indicators suggest that the labour market is now tightening rapidly and weathering any Brexit uncertainty well. The business substance within the private sector is driving this growth with business employment, excluding in the agriculture sector and the self-employed, up by 5.2% in Q1. We expect unemployment will be below 6% by the end of the year.
"Despite this, there are serious downside risks on the horizon. Following a fall last year, indigenous exports to the UK have recovered some lost ground in the first half of 2017. But there will be increased volatility as the year goes on, with sterling depreciating once more since the UK election. No matter what the outcome, Brexit will hurt both our indigenous exporters and rural regions disproportionately. Budget 2018 must include measures to protect these vulnerable sectors.
"Our analysis shows that around 243,000 workers, or 13.2% of the employed population, work in the most Brexit exposed sectors such as agri-food and beverages, tourism, transport and traditional manufacturing. The counties with the highest exposure to a ‘hard Brexit’ are Cavan (28%), Monaghan (27%), Kerry (22%) and Longford (21%) with over one in five workers in each of those counties employed in exposed sectors. Meanwhile exposure is lowest, as expected, in urban areas. The least exposed counties include Cork and Galway cities along with the four Dublin local authorities and their surrounding counties.
"The good news is we are facing these challenges from a position of strength due to the strong substance behind our business model. Budget 2018 must ensure decisive policy action to improve competitiveness and adopt measures to prepare our indigenous enterprise base. We should also be making sure a clear pipeline of infrastructure projects, underpinned by the National Planning Framework, is ready to support regional competitiveness in the event of a hard Brexit. Dublin will also need adequate supporting infrastructure in public transport and housing over the coming years if we are to take full advantage of any investment opportunities arising from Brexit."
Key points from the Ibec quarterly assessment include:
Growth: Ibec forecasts GDP growth of 4.2% this year and 3.2% in 2018 driven by a strong domestic economy.
Employment: Will grow by 3% in 2017 creating almost 60,000 jobs.
Domestic Economy: Continued improvements in the labour market should see consumer spending rise by 2.8%. Investment is forecast to grow by 8.4% as the construction sector continues to recover from a low base.
Inflation: Is expected to be weak this year at 0.5% due to a weak sterling and continued strong price competition in retail.
Exports: Export growth slowed last year and despite some respite in H1 this is expected to intensify over coming months.
- IBEC_Q2_2017.pdf - 116 Kbytes