Ireland still has 'comfortably' the fastest-growing economy in Europe

However, exports were hurt last year by Brexit-inspired headwinds.

By Conor McMahon Deputy editor, Fora

IRELAND’S ECONOMY PERFORMED better than expected last year – and things are looking up in 2017 forecasts.

Preliminary figures from the CSO showed that the country’s gross domestic product (GDP) grew by 5.2% in 2016, slightly ahead of analysts’ forecasts.

While down on the now-infamous ‘leprechaun economics’ growth figure of 26% for 2015 – a tally dramatically skewed by the activities of multinationals in Ireland – the numbers for last year indicate a strong domestic market.

However, exports lagged behind other indicators. The output from the sector grew a relatively weak 2.4% last year – the joint-lowest figure since 2008 - in the face of numerous Brexit-related headwinds.

That said, Davy chief economist Conall Mac Coille said the better-than-expected GDP figures coupled with a slight drop in the unemployment rate last month have prompted a revision of the stockbrokers’ economic outlook for 2017.

“We expect to revise up our Irish GDP forecast for 2017 from the current 3.7% to above 4%,” Mac Coille wrote in a briefing note.

“The big picture is that Ireland is still comfortably the fastest-growing economy in Europe.”

Davy attributed the export slowdown to “sterling’s weakness, poor UK orders in the wake of the Brexit referendum and weak trends in global manufacturing”.

‘Statistical issues’

While noting that Ireland’s GDP growth was the EU’s best for the third year in a row, KBC analysts warned the numbers remained ”somewhat flattered by multinational activities”.

However, even allowing for such “statistical issues” that might obscure the figures, the bank’s economists also predicted Ireland’s GDP would be up 4% in 2017.

Ibec chief Danny McCoy said that “today’s figures show that the Irish economy continues to be a European success story”.

“They underline the fact that the Irish business model has remained resilient,” he said.

McCoy said the impact of external threats like Brexit were evident in the slowdown in export growth, but added that Ireland is “facing those threats from a position of economic and fiscal strength”.