Ireland’s economic outlook remains “clouded by uncertainty”, the European Commission has warned, particularly in terms of the UK’s exit from the bloc and international tax changes.
However, the bloc also suggested that Ireland’s economy was in danger of overheating, suggesting that a tight labour market and diminishing spare capacity ‘point to an economy possibly operating above its potential’.
In its Summer 2019 Economic Forecast, the Commission cut its growth forecast for the euro zone economy next year, citing uncertainty over US trade policy.
With regard to Ireland, the EU said that Ireland was heavily exposed to ‘difficult-to-predict activities’ of multinationals, which could drive headline growth 'in either direction', it said.
The Commission said that Ireland maintained its momentum in the first half of 2019, with employment, weekly earnings, retail sales all continuing to grow, and industrial production making a robust turnaround.
It suggested that domestic activity will continue to grow at a solid pace on the back of growth in employment and wages.
It expects Ireland’s real GDP to grow by 4% for the current year, and to a ‘moderate’ 3.4% in 2020.
The Commission suggested that this slowdown in growth will be due to less favourable prospects in key export markets, increasing capacity constraints, and a slowdown in government expenditures.
Overall, the European economy is set for its seventh consecutive year of growth in 2019, with all Member States' economies due to expand growth.
Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs, welcomed the broad growth in the EU economy, despite a difficult global backdrop.
“All EU countries are set to grow again in both 2019 and 2020, with the strong labour market supporting demand,” Moscovici said.
“Given the numerous risks to the outlook, we must intensify efforts to further strengthen the resilience of our economies and of the euro area as a whole.”
© 2019 Checkout – your source for the latest Irish retail news. Article by Aidan O’Sullivan. Click sign-up to subscribe to Checkout.