EY has revised upwards its forecasts for the Republic of Ireland (ROI) in the firm’s latest EY Economic Eye report, thanks to a strong domestic economy with wage growth and public spending boosts.
The professional and consultancy services firm projects that ROI will achieve growth of 3.4% in 2020 before moderating to 2.8% and 2.7% growth in 2021 and 2022 respectively.
EY say Ireland’s recent election result suggests a desire for a greater translation of economic growth to improvements in citizens’ lives and may result in a new policy direction for the next government, although how this government looks remains unknown. This may lead to an acceleration of spending on infrastructure and hiring front line public service workers, both of which will further support the domestic economy.
Furthermore, EY say the recent outbreak of the Coronavirus and the tragic bush fires in Australia have stalled the slight improvement in the global economic outlook and further reminded us that there are new priorities that take precedent over solely achieving economic growth.
The Irish economy has added 320,800 jobs over the last 5 years to the third quarter of 2019 on a seasonally adjusted basis, and although this is expected to slow to 173,400 over the next 5 years the labour market remains tight with firms facing increasingly tougher hiring conditions. EY forecasts suggest ICT, Construction, Accommodation and Food will lead the way over the period. The high cost of rent and a scarcity of suitable accommodation makes the go-to solution of accelerated migration more challenging.
EY say a notable pickup in business sentiment in early 2020 reflected a feeling that the worst of Brexit is over with the UK having left the EU on 31st January. Though little noticeable change will occur during the transition year the hard work lies ahead as the EU and the UK try to agree a trade arrangement and deal with the unique challenge that NI presents.
Commenting on the report, Chief Economist for EY Ireland, Professor Neil Gibson said, "The contrast between economic growth and election results in ROI is striking as the incumbent government could not secure a majority with headline growth rates of well over 5%. This speaks to a long standing disconnect between headline growth and the citizen experience."
He added, "Regardless of the shape of the next government we are likely to see a focus on public services, quality of life and what can be characterised as more internal, or personal outcomes rather than a singular drive for growth and globalisation. It is this nexus of economic, social and environmental considerations that are creating a new paradigm and shaping the political landscape."
Source: www.businessworld.ie
