EY has revised downwards its economic forecast for Ireland on the back of weaker global outlook, following impressive GDP growth of 8.2% in 2018.
EY now predicts GDP growth of 3% in 2020 (down from 3.3%), and a growth of 3.7% in 2019 (down from 4.1% in June).
EY’s Economic Eye forecast published today (9 September), said that this downward revision was based on the assumption of an orderly Brexit, and goes against the continued strength of the labour market, which remains in stark contrast to the downbeat backdrop.
In the event of a no-deal Brexit, EY said that its projections for 2020 would dip further to just 1.3% growth.
“The external economic climate is as challenging as it has been for a decade. Despite strong domestic tailwinds, the dual threat of trade wars and Brexit have the potential to derail Ireland’s rapid growth,” Professor Neil Gibson, Chief Economist for EY Ireland said.
“Estimates of a no-deal impact vary considerably, but they all suggest there will be a cost in the form of disruption across the island.”
For the full island, EY projected that Northern Ireland’s economic growth rate for 2020 will be at 1.1%, and in 2021 will it will increase to 1.6%.
EY said that the region has now slipped behind the UK average growth rate after a relatively strong 2018, with a no-deal Brexit projected to be sufficient to push Northern Ireland into recession.
“Regardless of the overall macro impact, the local and firm-specific effects could be devastating for some, with no-deal job losses likely to have a very particular sub-regional pattern,” Gibson added.
However, in spite of the downward revisions, EY’s Economic Eye four that the more challenging global backdrop often does not match with what people are feeling in Ireland, with positive labour market growth, rising real incomes and increases in government spending.
“There is no doubt that the resilience and adaptability of businesses will be tested, as will the resolve of Government, but the remarkable level of growth and job creation over the last five years is no small feat and places Ireland on a solid footing.”
© 2019 Checkout – your source for the latest Irish retail news. Article by Aidan O’Sullivan. Click sign-up to subscribe to Checkout.