Central Bank revises GDP growth up for 2018

An additional 89,000 people are expected to be in the workforce by next year

Central Bank revises GDP growth up for 2018

A view of the Central Bank in the Dublin Docklands | Image: Niall Carson/PA Archive/PA Images

The Central Bank says it expects the Irish economy to grow more than previously expected this year.

It has revised its GDP growth forecast up to 4.4%, adding that: "The Irish economy continues to perform strongly".

It also says demand from Ireland's main trading partners is expected to be "somewhat stronger" in 2018 than was expected in a previous forecast.

"A slight moderation in GDP growth at 3.9% in 2019 is expected as the economy gets closer to full employment and growth in our trading partners moderates", it adds.

While it says employment is expected to grow by 2.2% in 2018 and 1.8% in 2019.

The bank says this growth would see an additional 89,000 people in work and overall employment levels at 2.3 million.

That would be in excess of the pre-crisis 2007 peak level.

But it warns that the make-up of employment is likely to be "significantly different" by 2019 - with approximately one in 16 persons directly employed in construction, compared to one in nine back in 2007.

"Brexit continues to be the big unknown"

Prices for services are also expected to increase.

The Central Bank says: "A gradual pick-up in headline inflation to 0.7% in 2018 and 0.9% in 2019 is forecast as the recent negative impact on goods prices, driven largely by the fall in sterling and cheaper imports, moderates."

Mark Cassidy is director of economics and statistics with the Central Bank.

"The outlook for Ireland’s economy is largely positive, driven by broad-based growth in employment, which has boosted incomes and consumer spending.

"Crucially, our outlook brings the prospect of full employment into view as the unemployment rate is projected to fall to just over 5% next year.

"Average earnings are also expected to increase, by 3.2% this year and 3.4% next year."

"However, we cannot afford to be complacent as the economic growth we are projecting will not necessarily be plain sailing and is faced by real and varied risks.

"The small and open nature of our economy leaves us particularly vulnerable to the present uncertainty in the global taxation environment.

"Brexit continues to be the big unknown in terms of future trading conditions with the UK, a vital economic partner.

"And with such solid growth, the risk of economic overheating - or boom and bust economic cycles - means that we continue to urge prudence in public spending in support of stable growth."