EY has this week released its latest Economic Eye Summer Forecast which predicts economic growth across the island of Ireland to remain steady at 2.4% until the end of decade. However, the country’s resilience and competitiveness will continue to be tested in the face of global and economic political developments, according to the report.
GDP growth in the Republic of Ireland is expected to reach 2.6% in 2017, with an average growth rate of 2.6% per annum until 2020, bolstered by continued consumer spending.
EY Economic Eye finds that the all island economy is expected to grow, with total employment across the island of Ireland set to increase by 29,000 jobs in 2017. The Republic of Ireland will ,however, fair better than Northern Ireland, with almost 91,000 jobs forecast to be created by 2020.
Furthermore, EY Economic Eye finds that within certain sectors such as agriculture, agri food and professional services, jobs growth is clustered around an east coast corridor centred on Dublin and Belfast – raising new questions around capacity constraints.
According to the report, improving domestic conditions are supporting many of the sectors hardest hit during the recession towards recovery, with wholesale and retail to grow by 19,400 jobs and construction to be boosted by 18,500 jobs according to the forecast.
Continued strength in the professional, scientific and technical sector is set to be supported by an upturn in public sector employment as government spending levels improve, with public administration and defence; and health and social work; each projected to grow by more than 10,000 jobs.
Meanwhile agriculture, which has been well documented as the most exposed sector to Brexit, is forecast to lose 12,800 jobs by 2020. With agriculture and industrial employment making up approximately 20% of employment in 19 of Ireland’s 26 counties and four of Northern Ireland’s 11 councils, both jurisdictions are likely to be significantly impacted if a free trade agreement cannot be reached, or some form of unique status designation for the sector is not achieved.
The report also states that inflation and wages data will be critical to watch in the coming months. While jobs growth in the Republic of Ireland will outperform Northern Ireland and mainland UK, the country will not be immune to its own set of challenges. Increasing demands for public services, skills and talent shortages in the private sector, the rising cost of living, and housing shortages in Dublin will all place clear upward pressure on wages and cause them to rise by an average of 3% per annum by 2020.
Commenting on the report, Economic Advisor to EY Economic Eye, Professor Neil Gibson said, "Six months on from our last forecast, there is no more clarity on exactly what shape Brexit will take, and in the absence of information on trade deals, customs and border plans, and migration policy, caution must be placed on any forecasts. The exit process for the UK is likely to be fairly bumpy, and although it makes clear economic sense to arrive at a sensible trade arrangement, that cannot be assumed."
He added, "That said, the Republic of Ireland economy is enjoying a sustained period of job growth, and a healthy balance between exports, consumer and government spending suggests that the economy is well placed to meet these challenges."
Source: www.businessworld.ie
