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Economic Growth

Dáil Éireann Debate, Wednesday - 5 July 2017

Wednesday, 5 July 2017

Questions (85, 90, 95)

Bernard Durkan

Question:

85. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the economic fundamentals remain positive in terms of the future of the economy; and if he will make a statement on the matter. [31755/17]

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Bernard Durkan

Question:

90. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he expects to be in a position to utilise the principles of reform as experienced previously to remain of major benefit to economic prospects in the future; and if he will make a statement on the matter. [31762/17]

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Bernard Durkan

Question:

95. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which his Department can forecast economic prospects over the next five years in view of the variety of potential challenges globally; and if he will make a statement on the matter. [31768/17]

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Written answers

I propose to take Questions Nos. 85, 90 and 95 together.

My Department's most recent economic forecasts were published in the 2017 Stability Programme Update. Real GDP growth of 4.3 per cent was projected for this year while growth is forecast to average 3 per cent over the period 2018 – 2021. These forecasts have been endorsed by the Irish Fiscal Advisory Council.

However, the projections are, as always, contingent forecasts; they are based upon assumptions for key inputs such as trading partner growth and the evolution of commodity prices. Assumptions on external demand are particularly uncertain at present given the shifting geo-political landscape. The task of forecasting in an Irish context is further complicated by the globalised nature of the Irish economy and our highly concentrated industrial base. To provide an indication of the uncertainty surrounding my Department’s forecasts, a fan chart is produced in the Stability Programme Update highlighting the confidence bands for real GDP growth.

Notwithstanding the many challenges that the Irish economy faces, both externally and domestically, the economic fundamentals are strong;

- Irish competitiveness has been restored. The latest figures from the Central Bank of Ireland show that Ireland's real harmonised competitiveness indicator, a widely used measure of competitiveness in Europe, has improved by approximately 20 per cent between its peak in 2008 and May 2017.

- Following a number of years of rebalancing, the composition of activity is also now more sustainable, with all sectors positively contributing to growth.

- Employment has increased significantly with over 200,000 jobs created since 2012, and total employment is now above 2 million.  Unemployment has fallen by some 8 ¾ percentage points from its peak in 2012 and at end May stood at 6.4 per cent.

- The public finances have been put on a sustainable path. We remain on course to meet our medium-term budgetary objective of a balanced budget in structural terms in 2018 i.e. a structural budget balance of -0.5 per cent of GDP.

The reform efforts of the past few years have been an integral part of the Irish economic recovery. However, there is no room for complacency given the considerable economic challenges we face, notably Brexit, the change in policy direction by the new US administration and high levels of uncertainty in the global economy.  In light of these circumstances, the focus must be on ensuring that the economy is best placed to weather economic shocks to the greatest extent possible.

The best way to do this is through continued implementation of competitiveness oriented policies - including those that address emerging bottlenecks - along with prudent management of the public finances. That is what this Government will continue to do.

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