BUSINESS GROUP IBEC has forecasted the Irish economy to grow 4.2% this year, and says the country has now moved past its “recovery” phase.
Despite the uncertainty caused by Brexit, “the fundamentals of the Irish economy are very solid” according to Ibec.
One cause of concern, however, is the cost of renting in Ireland which it says is “damaging competitiveness”. Failure to solve the housing crisis will mean that prices on other goods will increase in the future, it says.
Ibec’s head of tax and fiscal policy Gerard Brady says: “Since the crisis we have seen a recovery in the Irish economy which has been exceptional.
This was driven by the strength of the Irish business model with record FDI and an increasingly global footprint from our indigenous industries. Because of this growth in our business substance, the economic recovery phase is now over, with 2017 seeing Ireland surpass many of the most important pre-crisis milestones.
It even predicts that we could reach full employment before the end of 2018, although it is “notable that the number of Irish persons returning from abroad has not grown significantly since the economic turnaround”.
In terms of comparison with our EU counterparts, Ireland is performing well in terms of earnings growth and household income, but also considerably higher in the cost of rent.
“In 2017, Irish rents grew at over six times the median of the other EU15 countries,” Ibec says.
Brady says that the fundamentals underpinning the economy are a lot stronger than the previous period of economic growth:
This phase is now more sustainable than the ‘boom’ period.
He did add, however, that the main question facing the economy in the next few years is how it meets the needs of a growing population, with major challenges apparent in the housing sector.
If the government was to deliver the 26,000 houses by 2020 which was a target of the Rebuilding Ireland plan, we will need an extra 50,000 construction workers, according to Brady.
He adds: “Delivering on the promise of growth with stretched capacity and a tight labour market, whilst also maintaining competitiveness, will be a key challenge ahead for both business and the government.”
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