BUSINESS GROUP IBEC has forecast the Irish economy will 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 the business group said is “damaging competitiveness”. Failure to solve the housing crisis will mean that prices on other goods will increase in the future, it said.
Ibec’s head of tax and fiscal policy Gerard Brady said: “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.”
The group predicts that Ireland 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 comparison with Ireland’s EU counterparts, the Republic is performing well for earnings growth and household income but has experienced significant inflation in property rents.
“In 2017, Irish rents grew at over six times the median of the other EU15 countries,” Ibec said.
Brady said 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.”
But he added 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 that were targeted in the Rebuilding Ireland plan, the country would need an extra 50,000 construction workers, according to Brady.
He said: “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.”
Written by Sean Murray and posted on TheJournal.ie