The ESRI has published its latest Economic Commentary this morning which predicts that GDP will grow by 3.8% and 3.6% in 2017 and 2018. This is exactly in line with its Spring estimates.
The most notable changes in the ESRI’s views relate to the public finances. It now expects the budget deficit to come in at 0.5% of GDP this year, higher than its previous forecast of just 0.1% of GDP.
Following on from this, it warns of the concentrated nature of the tax revenues in Ireland. Using a measure of concentration (the Herfindahl-Hirchman Index), it shows that tax revenues are now significantly more concentrated than they were throughout the 2000s.
Commenting on the report, Goodbody Stockbrokers said, "The abolition of water charges and the very modest property tax were an opportunity to address this issue somewhat but that opportunity now appears to have been lost. In an analysis of the implications of hard-Brexit on the public finances, the ESRI state that fiscal space will be reduced by a further €600m in the first three years following a hard-Brexit scenario."
They added, "The bottom line here is that while the economy continues to do well, there is still very limited room for manoeuvre in the public finances in the coming years."