Irish economy to reach full employment by the end of 2018

A report from Goodbody says Ireland's "lost decade" is at an end

Irish economy to reach full employment by the end of 2018

Shoppers in Dublin | Photocall file photo

A report on the Irish economy has found that it will reach full employment again by the end of next year.

Goodbody say rapid growth in construction and consumer spending will push core domestic demand beyond previous forecasts.

In its latest quarterly Irish Economy Health Check, it says unemployment will fall to just 5% in late 2018.

It says as a result of this, Ireland may need to start relying on immigrant labour to maintain its momentum as one of Europe's fastest-growing economies.

Goodbody chief economist Dermot O'Leary says: "Employment growth of 3.5% is the most visible evidence of strength in the Irish economy, but inflation pressures are starting to emerge.

"Brexit-related migrant flows have the potential to ease these pressures by adding to labour force growth."

Source: Goodbody

Goodbody is raising its forecasts for core domestic demand in 2017 to 4.5% from 3.7% and in 2018 to 4.3% from 3.6%.

It says as domestic spending returns to its previous 2007 peak, this will end "the lost decade" that followed the property crash.

However it says capacity constraints are becoming visible, especially in housing and infrastructure, meaning the government will have to prioritise capital spending in the coming years.

"With the population up by 12% in the past decade, spending per capita is still well below previous peaks and the dangerous 2007 imbalances do not exist", the report says.

"Nevertheless, capacity constraints are becoming visible, most prominently in the housing sector, but also in infrastructure. Addressing these issues will require a reprioritisation towards capital spending.

Source: Goodbody

"Ireland remains on track for a fourth year in succession of rapid growth. On the back of impressive momentum in the domestic economy, we are revising our forecasts upwards for both 2017 and 2018.

"Core domestic demand is now expected to grow by 4.5% in 2017, up from 3.7% previously. In 2018, we expect growth of 4.3%.

"More positive investment trends, construction growth and robust consumer spending are to be the drivers of this performance."