Employment growth of 3.5% is the most visible indicator of the strength of the Irish economy, with full-time jobs growing at the fastest pace since 1999. This is according to Goodbody Stockbrokers who are today upgrading forecasts for core domestic demand in both 2017 (from 3.7% to 4.5%) and 2018 (from 3.6% to 4.3%).
Goodbody claim double-digit volume growth in the construction sector and ongoing consumer spending will be the major contributors to this performance. In the latest Irish Economy Health Check, Goodbody notes that with the population up by 12% in the past decade, spending per capita is still well below previous peaks and the dangerous 2007 imbalances do not exist.
Nevertheless, Goodbody warn that capacity constraints are becoming visible, most prominently in the housing sector, but also in infrastructure. Addressing these issues will require a reprioritisation towards capital spending warns Goodbody.
Furthermore, according to Goodbody Stockbrokers, failure to agree a trade deal will do significant damage to trade between Ireland and the UK, with the highest tariffs likely to be applied to goods that Ireland depends most on the UK as a source of demand, namely the agrifood sector.
In the interim period, Goodbody believe Ireland may reap some of the dividends of the UK’s decision to leave the EU, with relocations already announced and more likely to get the green light in the coming months.
Today's report states, "Brexit is a complex issue. In terms of its impact on Ireland, it is time-inconsistent, regionally diverse and will affect sectors in different ways. This all contributes to the high margin for error around projections for 2019 and beyond. Much of this is outside of Ireland’s control, so focus should be on how Ireland can avoid the booms and busts of the past. For the short-term at least, rapid growth is expected to continue, taking Ireland back to its previous peak by the end of the year."