Thursday, 22 November 2018

Questions (61)

Bernard Durkan


61. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he remains satisfied that the economy remains competitive in all aspects; and if he will make a statement on the matter. [48739/18]

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Written answers (Question to Finance)

The economic recovery in Ireland was driven by a significant improvement in competitiveness, through productivity increases and wage and price moderation. The economy maintains this competitiveness today. Ireland’s real harmonised competitiveness indicator, a widely-used measure of competitiveness published by the Central Bank, has improved by approximately 21 per cent since its peak in 2008.

It is important that we preserve this competitiveness to facilitate continued growth. The recovery in the economy has not yet translated into a material rise in inflation. As measured by the Harmonised Index of Consumer Prices (HICP), inflation has averaged just 0.7 per cent on an annual basis thus far in 2018.

As outlined in my Department's recent economic forecasts, published with Budget 2019, the domestic economy is expected to be a driver of growth over the medium term. This could place upward pressure on prices and wages and lead to a reduction in competitiveness.

To avoid this, we must focus on maintaining competitiveness-oriented policies and prudent fiscal policy. As announced, the Government will achieve a balanced budget in 2019. We are also increasing public capital investment via the National Development Plan to further build capacity within the economy. This will address the bottlenecks to growth which emerged during the economic recovery, for example the need for residential development and public infrastructure investment. 

My Department will continue to closely monitor all developments related to competitiveness to avoid complacency and continue to achieve balanced growth.