The Economic and Social Research Institute (ESRI) have today released their Quarterly Economic Commentary for Winter 2016.
The ESRI forecasts GDP growth of 4.2% and 3.5% respectively In 2016 and 2017. These forecasts have, however, been revised marginally downwards since the beginning of the year, largely as a result of the Brexit referendum and other potential trade-related uncertainty.
The ESRI warns that uncertainty surrounding Brexit and the weakening of sterling are likely to hinder Irish export growth in 2017.
The Institute records that domestic sources of growth remain relatively robust. The building and construction components of investment have picked up in recent quarters and should continue to grow into the New Year, resulting in approximately 17,500 housing completions in 2017.
The labour market continues to improve and the unemployment rate is expected to reach 6.8% by the end of 2017.
Although the consumer sentiment index has not increased in recent months, the figure remains above the long-term average.
The combination of the above factors, combined with a muted inflation forecast, is likely to support strong consumption growth of 3.5% in 2017 according to ERSI.
Author Kieran McQuinn commented, "The outcome of the Brexit referendum was the most significant international development for the Irish economy in 2016. It is increasingly apparent at this stage that it may take some time before the necessary trade arrangements are concluded."
He added, "Until that happens, variables such as exchange rates, stock market returns, producer and consumer sentiment may continue to display heightened volatility. This, inevitably, impacts on our assessment of the trade performance of the Irish economy."
Source: www.businessworld.ie
