Wednesday, 29 May 2019

Questions (76)

Micheál Martin


76. Deputy Micheál Martin asked the Minister for Finance if his officials have received the recent OECD Economic Outlook Report published on 21 May 2019. [22681/19]

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Written answers (Question to Finance)

I regularly monitor the latest economic developments. My Department continually analyses short and medium-term macroeconomic trends in the European and international economy. This includes informing me of the latest forecasts of the global economy, and of our key trading partners from the international institutions.

The OECD Economic Outlook Report, published on 21 May 2019, shows a marked deterioration in the external environment. Global GDP growth slowed sharply in late 2018 and early 2019, and is stabilising at a lower level. The OECD is forecasting global growth to be 3.2 per cent this year before increasing slightly to 3.4 per cent in 2020.

Within the EU, the principal concerns at the present juncture relate to the timing and nature of Brexit, and the continued moderation of growth, which the OECD expects to remain subdued at 1.2 per cent in 2019 and 1.4 per cent in 2020.

The OECD project Ireland's economy to continue to grow strongly at 3.9 per cent this year, and 3.3 per cent in 2020. On this basis, although the pace of growth is easing, Ireland’s growth is set to remain above the Euro Area average. These forecasts are in line with my Department’s latest macroeconomic outlook, published in the Stability Programme Update 2019 last month.

Escalating trade conflicts are negatively affecting the growth outlook in all countries. The key issue for Europe and the world economy is to safeguard the open, rules-based, global trading system which has been associated with raising living standards throughout the world.

Ireland, as a highly open, export focused, economy is particularly sensitive to a slowdown in world trade and overall economic growth. The slowing world growth momentum and the implications for Ireland’s economy, underline the importance of improving the resilience of the economy by building fiscal buffers and focussing on productivity and competitiveness.

The OECD Economic Outlook notes that the Government should remain committed to improving the public finances, but that it should stand ready to mitigate disruptive consequences if significant risks materialise, such as a disorderly conclusion of the Brexit negotiations. Government policy is consistent with this objective. The forthcoming Summer Economic Statement will set out the broad parameters for macroeconomic growth, the fiscal outlook and constraints over the medium term in advance of this Autumn’s Budget.