The Irish economy is performing strongly in 2016 with all indicators of economic activity expanding at a solid pace, according to Jim Power’s Economic Outlook for Friends First published today.
The report shows that there has been some easing in activity since the beginning of the summer. This is evidenced in retail sales, car sales, exports to the UK and tax revenues. Sterling weakness and the uncertainty brought on by Brexit and the US election result are having an impact.
Looking ahead to 2017, there are immense risks to the Irish economic outlook including Brexit, the policies of President Trump, weak domestic political leadership, growing wage pressures in the public sector.
According to the report, the most obvious challenges that are presented to Ireland are for indigenous Irish exporters and tourism. Cross-border shopping is an immediate issue of concern. The main opportunity for Ireland would be through UK companies either re-locating or setting up branches in Ireland. However, housing, public services and the onerous personal tax burden all pose threats to those opportunities.
Commenting on the outlook, Chief Economist with Friends First, Jim Power stated, "Ireland cannot allow the cost competitiveness of the economy and the fiscal situation be undermined at a time when the recovery is facing immense challenges, not least from Brexit. The global rejection of conventional politics is becoming a bigger and bigger threat to the global economy and political stability."
He added, "The outlook for the Irish economy is shaping up to be positive for 2017 with all indicators suggesting that economic activity will continue expanding at a reasonable pace. However, we have to acknowledge the immense uncertainty given the range of external factors in operation. The global issues of Brexit and the election of Trump who takes the reins in January are open to many interpretations and only time will tell the actual nature of their impact."