Belfast Telegraph

Irish economy to grow 4.5% as incomes and employment numbers rise

The Irish economy is expected to grow by 4.5% this year after the Central Bank revised its outlook upwards.

Predictions for growth next year also rose to 3.6% and the number in work is likely to reach 2.1 million for the first time since the economic crash a decade earlier.

Improving incomes and employment plus forecast export growth are largely responsible for the more optimistic projection.

Gabriel Fagan, chief economist at the Bank, said: "The Irish economy continues to grow at a strong pace and the prospects for sustained and solid economic growth remain positive.

"Revised projections for growth this year and in 2018 reflect both stronger momentum in the domestic economy and improved prospects for external demand, especially from our European trading partners."

The Government has set out plans to spend an additional 1.5 billion euro between 2019 and 2021 after the country emerged from recession.

House prices have rocketed and ministers forecast 55,000 new jobs next year.

The Bank warned Brexit and the sensitivity to other potential international shocks continued to pose risks.

It added: "Positive developments in the labour market have helped incomes to recover, in turn supporting solid growth in consumer spending, though employment growth is expected to moderate next year following a period of exceptionally strong increases.

"Inflation remains subdued, reflecting the effect on goods prices of euro appreciation against sterling and weakness in energy prices."

It said the headline inflation rate is expected to increase by 0.3% in 2017, a downward revision from 0.7%. Excluding energy, it is expected to remain flat this year and climb to 1% next year.

Mr Fagan added: "As a small and open economy, Ireland continues to face economic risks externally.

"And despite there being little new information emerging to date, it is clear that the economic impact of Brexit on Ireland is set to be negative and material.

"At home, we must continue to prudently monitor the risk of overheating."

The Central Bank for the first time measured the size of the Irish economy excluding the distorting effects of multinational corporations' activities on Gross Domestic Product.

The bank said: "This new measurement results in notably higher general government deficit and debt ratios as well as higher ratios of private sector indebtedness than when using the traditional measurement of GDP.

"As such, the Central Bank continues to underscore the importance of economic policies that underpin stability and reduce uncertainty."

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