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Economic Competitiveness

Dáil Éireann Debate, Tuesday - 15 January 2019

Tuesday, 15 January 2019

Questions (228)

Fiona O'Loughlin

Question:

228. Deputy Fiona O'Loughlin 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. [1367/19]

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Written answers

The improvement in Ireland’s competitiveness has been at the cornerstone of the recovery in the Irish economy. Since 2008, the Central Bank’s real harmonised competitiveness indicator has improved by approximately 21 per cent.

The restoration of Irish competitiveness has been hard-won through improvements in productivity, wages and price moderation. It is important that this competitiveness is preserved and continues to facilitate sustainable economic growth.

Importantly for Ireland’s competitiveness, the robust growth in the economy has not yet given rise to inflationary pressure. For the first eleven months of the year, inflation as measured by the Harmonised Index of Consumer Prices (HICP) averaged just 0.7 per cent on an annual basis, this follows five consecutive years in which inflation has been below 1 per cent.

In the coming years, the domestic economy is expected to act as a primary driver of growth. In this context, we must remain cognisant of the potential upward pressure this will place on both prices and wages, which could give rise to a loss of competitiveness.

As highlighted in Budget 2019, our economy will also face a number of external risks in the years ahead. These risks primarily relate to a more adverse-than-expected outcome from Brexit, a rise in protectionism and a faster than expected normalisation of monetary policy.

As a number of these factors are beyond our control the best way we can mitigate against these risks is through prudent budgetary policy, careful management of the public finances and by focusing on competitiveness-oriented policies. That is what the Government has done and will continue to do going forward.

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