Dáil Éireann Debate, Tuesday - 24 October 2017
75. Deputy Bernard J. Durkan asked the Minister for Finance if he is satisfied regarding the ongoing progress of economic recovery; if he has identified particular issues requiring further attention; if he has further satisfied himself that the economy remains well placed to maximise its potential including job creation in the future; and if he will make a statement on the matter. [44728/17]
View answer100. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which the economic situation continues to compete effectively with all others in the EU having particular regard to the situation in the UK; and if he will make a statement on the matter. [45067/17]
View answer102. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the basic fundamental indicators remain positive and constant for the economy, notwithstanding developments regarding Brexit; and if he will make a statement on the matter. [45069/17]
View answer104. Deputy Bernard J. Durkan asked the Minister for Finance if he continues to remain satisfied regarding the veracity of the main economic indicators in view of the challenges of the future; and if he will make a statement on the matter. [45071/17]
View answerI propose to take Questions Nos. 75, 100, 102 and 104 together.
Recent economic indicators have generally been positive.
Real GDP grew by 5.8 per cent in the second quarter of this year on an annual basis. This follows annual growth of 5.2 per cent in the first quarter.
Strong GDP growth is being confirmed by developments in the labour market. Employment growth remains strong with an annual rate of 2.4 per cent recorded in the second quarter of 2017, representing the creation of over 48,000 additional jobs over the year. The increase in employment remains broad based with gains recorded in 11 of the 14 sectors reported by the CSO. Since the low-point in 2012 there are now an additional 230,000 people in employment.
The continued growth in employment has seen the unemployment rate fall from over 15 per cent in 2012 to 6.1 per cent in September 2017 which is close to the level considered to represent full employment in Ireland.
The strong performance of the labour market is set to continue in the short term. As part of Budget 2018, my Department is projecting that an additional 48,000 jobs will be created next year.
However, there are a number of risks at present including the UK’s decision to exit the EU, related to this the risk of a loss in competitiveness, and the possibility of significant tax reform in the US.
Significant progress has been made in recent years in improving Ireland's competitiveness. 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 over 19 per cent between its peak in 2008 and September 2017. However, the sharp appreciation of the euro-sterling rate is posing significant challenges particularly for the traditional manufacturing sector, the tourism sector and areas sensitive to cross-border trade.
These sources of uncertainty highlight the importance of prudent management of the public finances. While Ireland’s debt to GDP ratio has come down considerably in recent years, a significant factor in this has been GDP growth, which can be exaggerated in an Irish context. In response to the well-known limitations with GDP and GNP figures, the CSO has published an alternative measure of economic activity titled modified Gross National Income or GNI*. Using GNI* as the denominator highlights the still elevated levels of debt in the Irish economy, and the importance of sensible budgetary policies. It is also important to focus on competitiveness-oriented policies that improve the resilience of the economy to ensure that we are in a better position to weather any global shocks which materialise.
In summary, I am satisfied that the economic indicators remain stable and that our economic fundamentals are strong, although the level of uncertainty remains elevated. In this regard, it is critical that appropriate polices are implemented and that is what the Government will continue to do.
