Vol. 496 No. 6
279 Mr. Durkan asked the Minister for Finance the degree to which he proposes to respond in the context of economic strategy in 1999 to the increased threat of sharper economic competition from both EU and non-EU states; and if he will make a statement on the matter. [23881/98]
282 Mr. Durkan asked the Minister for Finance if he can give an assurance of Ireland's ability to retain its competitiveness as an investment location within the EU taking into consideration all economic indicators; and if he will make a statement on the matter. [23884/98]
286 Mr. Durkan asked the Minister for Finance if the economic fundamentals are correct in terms of ensuring future job expansion and protection and the need for competitiveness; and if he will make a statement on the matter. [23888/98]
I propose to take Questions Nos. 279, 282 and 286 together.
Economic forecasts indicate that the outlook for jobs expansion, and the maintenance of Irish competitiveness in markets abroad and as an investment location, remains broadly favourable. For the fifth successive year, the remarkable growth performance of the Irish economy continued in 1998. GDP and employment are estimated to have risen strongly again. Despite strong economic growth, inflation has remained moderate. The outlook for 1999 is for further strong growth in output and employment, despite a less favourable international economic environment. Inflation is also likely to continue to be moderate. Ireland's relatively youthful population, and our educated labour force, our future participation in the euro and our continuing successful economic performance should help to maintain Ireland's attractiveness as an investment location.
While the outlook is broadly positive, there are challenges to be faced. The outlook for inflation is moderate, but there is no room for complacency. Inflationary pressures could emerge if wages growth accelerates, thereby damaging the competitiveness of Irish goods and services and our attractiveness as an investment location. There are some signs of wage pressures in the economy. We must be vigilant to ensure pay moderation continues to be the norm.
The intensification of world competition for trade and investment is likely to increase difficulties for the maintenance of our shares in these areas. This challenge will be compounded by the impact of increased competition in the EU with the launch of the euro. We must remain dedicated to maintaining competitiveness and meeting these challenges.
Under EMU, Ireland's monetary policy will be determined by the European Central Bank, having regard to monetary conditions prevailing the euro zone as a whole. There will be no prospect of using an exchange rate or interest rate instrument to cushion shocks that affect Ireland and hence our competitiveness. We must therefore be resourceful in use of other instruments that remain under our domestic control. Consequently, fiscal, income and structural policies in 1999 will play a greater role than hitherto in maintaining competitiveness.
