Republic poised to pull ahead of nearby eurozone countries
Growth in the Republic – one of Northern Ireland's main trading partners – is set to pull ahead of other peripheral eurozone countries, it was claimed today.
The EY Eurozone forecast said Irish GDP would increase in 2015 by 1.9%, by 2.5% in 2016 and 2.8% in 2017 – pulling ahead of other member states like Spain and Portugal.
In contrast to Ireland's recovery rate of 1.9%, Spain would return to growth at a rate of only 0.8%.
But even Irish growth would be out-paced by Latvia, the newest member of the eurozone, which would enjoy growth of 4%, and Estonia at 2.5%.
The growth of Spain and Ireland could be interpreted as vindication of those countries' painful economic reforms, EY said.
In contrast, GDP growth in France was forecast at just 0.7% – below the eurozone average – while other core EU countries like Belgium, the Netherlands and Finland were also predicted to have slow growth.
Mike McKerr, managing partner of EY Ireland, said the growth of the peripheral countries could bring opportunities.
"As their economies continue to rebalance and their labour forces become more competitive, businesses from Ireland, the rest of the Eurozone and other parts of the world could gain a competitive advantage by expanding operations or exporting into these countries." EY predicted growth in exports of 3.5% in 2014 and 3.7% in 2015, which would continue to drive recovery in the peripheral countries, especially if the euro continued in its weakened state.
However, the eurozone's growth would lag behind other major economies and with growth of 1% in 2014, followed by a pick-up to 1.4% in 2015, contrasting with US economic growth of 3%.
Nonetheless, the eurozone would benefit from a pick-up in demand in the US market – while recovery in demand in Ireland would also take hold.
Tom Rogers, senior economic adviser to the EY Eurozone Forecast added: "The eurozone recovery is likely to gather momentum this year but risks to the forecast do remain. While the risks of a break-up have diminished and some of the peripheral countries have surprised on the upside, deflation and unemployment will remain ongoing concerns."