In its latest Quarterly Economic Commentary published today, the ESRI continue to forecast healthy albeit moderating economic growth in 2019 and 2020, with the forecasts subject to
the assumption that the United Kingdom remains part of the European Union.
The ESRI forecasts GDP growth of 4.9% in 2019 and 3.1% in 2020. The problems associated with the MNCs and their distorting effects have been well documented, as such we focus on personal consumption (forecasted to grow by 2.7% and 2.5% in 2019 and 2020, respectively) and government expenditure (forecasted to grow by 4.2% and 3.6% in 2019 and 2020, respectively).
Elsewhere, the unemployment rate is set to fall to 5.1% in 2019 (from 5.8% in 2018) and to 5% in 2020.
The ESRI’s forecasts fall in line with Goodbody Stockbroker’s with the economy. On one hand, Goodbody say the economy is growing at a healthy and robust level driven by wage growth in the range of 3- 4% combined with consumers spending within their means, growing government spending, and increasing investment in construction.
On the other hand, a no-deal Brexit poses the most immediate and real threat to the economy.
Under a no-deal scenario, the ESRI’s report has said that the economy could conceivably contract in 2020. Elsewhere, other threats to Ireland’s economy come in the form of the reliance of public finances to strong flows of FDI and slowing global trade.
According to Goodbody Stockbrokers, "The ESRI’s forecasts have been made under the assumption that the UK remains in the EU. As it stands, with the EU and UK seemingly at polar opposites in negotiations, an extension seems the most likely outcome in the near-term. With this in mind, the assumption looks to hold through this year, but turning to 2020, a no-deal outcome remains the default outcome. The Irish economy continues to walk along a knife-edge."