Dáil Éireann Debate, Wednesday - 18 May 2016
16. Deputy Bernard J. Durkan asked the Minister for Finance if he is confident that the fundamental economic indicators remain positive and that economic growth will remain in line with expectations in 2016 and for the foreseeable future; if corrections or improvements are necessary to ensure economic performance in the short, medium and long term; and if he will make a statement on the matter. [10202/16]
View answerIn general, recent indicators have been very positive, indicating the economic recovery is strengthening in a sustainable manner. In the Stability Programme Update, published at the end of April, my Department forecast that the economy would grow by 4.9 per cent in 2016, by 3.9 per cent in 2017, and by 3.25 per cent on average over the remainder of the forecast horizon out to 2021.
Importantly, domestic demand made a strong positive contribution to growth in 2015 with consumption increasing by 3.5 per cent in 2015 and investment up by 28 per cent. This is crucial as domestic sectors are both jobs-rich and tax-rich. The external sector is also showing continuing signs of growth, with exports increasing by 13.8 per cent in 2015.
The economic recovery is also clearly evident in the labour market where we have now had thirteen successive quarters of employment growth. Last year, employment increased by 2.6 per cent, equivalent to 50,000 new jobs. The seasonally adjusted unemployment rate fell to 8.4 per cent in April, down from almost 10 per cent a year earlier. This is the lowest rate of unemployment since December 2008.
However, there are several sources of uncertainty. Weaker than expected trading partner growth would negatively impact on Irish growth through reduced exports. Growth in Emerging Market Economies disappointed in 2015, and while Ireland's direct trade exposure remains relatively small, we would be exposed to a more generalised slowdown in the world economy. Brexit is another downside risk facing the Irish economy with Ireland potentially more exposed than most to a UK exit.
Domestically, the high level of private debt, while falling, remains a concern, and any deterioration in the external environment could prompt households and firms to raise the pace of deleveraging, with adverse implications for domestic demand.
This uncertainty highlights the importance of prudent management of the public finances and of competitiveness-oriented policies that would help the Irish economy to weather any global economic downturn that may emerge.
In summary, I am confident that significant economic progress can be made in the years ahead. However, this is critically contingent upon implementing appropriate polices and that is what the Government intends to do.
