The Irish Economy: Unleashing the upturn and unburdening the squeezed middle
- Real GDP could expand by 4.3% this year, which is up from a forecast of 3.3% at the beginning of the year
- Momentum evident in the Irish economy in 2016 has carried over into 2017 and most economic indicators are continuing to develop in a positive manner
- The overall trade performance so far in 2017 is holding up very well and should remain the case for the remainder of the year
- However, the squeezed middle burden is becoming more pronounced as costs continue to increase
- The UK economy is not being adversely affected to any great extent by Brexit and the Euro Zone growth story is getting steadily better
The Irish economy continues to show solid momentum and most economic indicators are continuing to develop positively, however there are many factors which could hamper its performance during 2017, according to Jim Power’s Economic Outlook for Friends First.
Commenting on this, Jim Power, Chief Economist with Friends First said, “Prospects for the year ahead are looking better than at the beginning of the year. Sterling has stabilised; the labour market is strong; business investment intentions are promising; and real GDP could well expand by 4.3% this year, which is up from a forecast of 3.3% at the beginning of the year.
However there are many factors which could impinge on this growth not least uncertainty with Brexit, the continued caution of consumers, the increased level of employment not translating to an increased income tax take and the increase in the cost of living and the price of what are necessities for many people.
The key challenges for Irish policy makers over the coming year will be Brexit related uncertainty; pay pressures in the public sector; pressure to increase expenditure on public services; and solving the crisis in the housing market.
The areas of priority should include controlling all of the costs of doing business, particularly pay pressures in the public sector; all aspects of infrastructure; the supply of high quality affordable housing for owner-occupier and rental purposes; and high quality public services. A supply side approach should dominate the housing supply issue, while all stakeholders need to recognise that the more money that is devoted to public sector pay increases, the less that will be available for investment in public services,” Power said.