As published in Budget 2019, my Department has forecast GDP growth of 7.5 per cent this year and 4.2 per cent in 2019. This growth is expected to be broad based, with both domestic demand and net exports making positive contributions. Indeed, modified domestic demand is forecast to grow by 5.2 per cent this year and by 4.1 per cent in 2019.
As a barometer of how well our economy is preforming, there is no story more positive than the one emanating from our labour market, with more people working in our economy than ever before. In addition, further output growth should continue to pay dividends in the labour market next year, with over 60,000 jobs likely to be created and an unemployment rate converging towards 5 per cent.
In an EU context, Ireland remains one of the fastest growing Member States. The strong growth and performance seen in our economy is also clearly illustrated by a comparison with the performance of our main trading partners – the euro area, the UK and the US. Following stronger than expected growth last year, the pace of expansion in the euro area and EU economies is expected to ease. For the euro area the Commission is forecasting growth of 2.1 per cent this year, moderating to 1.9 per cent and easing further to 1.7 per cent in 2020. For the UK, modest GDP growth of 1.3 per cent is expected this year slowing slightly to 1.2 per cent for both 2019 and 2020, based on a technical assumption of status quo in terms of trading relations between the EU27 and the UK. The US economy continues to benefit from several tailwinds, supporting GDP growth of 2.9 per cent this year, although this is expected to moderate to 2.6 per cent next year and to 1.9 per cent in 2020. In common with Ireland, there has been a recovery in employment growth in all our main export markets – though at a more modest pace – with a corresponding reduction in unemployment.