IMF warns of 'external risks' to otherwise 'broadly positive' Irish economic outlook

An IMF mission says the economy is growing at a healthy pace, but notes that factors such as Brexit are adding to any uncertainty

IMF warns of 'external risks' to otherwise 'broadly positive' Irish economic outlook

Picture by Itsuo Inouye AP/Press Association Images

The International Monetary Fund (IMF) has warned that 'external risks' including Brexit and the recent US election result are the main danger to Ireland's economy.

An IMF monitoring mission visited Dublin between November 29th and December 2nd.

The organisation carries out regular surveillance missions to countries with 'significant IMF credit outstanding'.

In a statement issued tonight, the mission said: "The Irish economy is growing at a healthy pace, but remains subject to downside risks. Commendable progress has been achieved through a long and difficult adjustment period.

"The mission welcomes the authorities’ ongoing commitment to reinforce the recovery, while safeguarding financial stability and restoring needed buffers through steady fiscal adjustment."

The statement highlights that 'external risks dominate' in the 'highly open' Irish economy.

It warns: "Brexit-related risks, a sustained low growth-low inflation environment in Europe, a changing political landscape in the US and Europe and rising anti-globalization sentiment, as well as ongoing developments in corporate tax treatment at the international level add to uncertainty.

"Within a challenging political context, agreement on the 2017 budget represents an important milestone for the new minority government."

It notes that Ireland's capacity to repay the IMF remain strong despite these risks.

The mission also suggests that Irish fiscal policy could be more supportive of growth, and that banks continue to operate in a 'challenging environment'.

It cautions that plans to eliminate USC should not come at "the expense of the breadth and stability of the tax base".

The mission added that it welcomes the Government's action plan on housing, but advises that any fiscal incentives should be limited and focus on assisting people most in need.