Wednesday, 19 June 2019

Questions (107, 112)

Bernard Durkan

Question:

107. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which economic performance here compares with other countries within the European Union; and if he will make a statement on the matter. [25838/19]

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Bernard Durkan

Question:

112. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which he remains satisfied regarding the economic performance of Ireland when compared to other countries throughout and outside Europe; and if he will make a statement on the matter. [25847/19]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 107 and 112 together.

As published in the Stability Programme Update (SPU) 2019, my Department has forecast economic growth to moderate to a more sustainable rate of 3.9 per cent in 2019, and to continue at the broadly similar pace of 3.3 per cent for 2020. Although growth rates have moderated from 2018, they still compare very favourably to other EU, and significant non-EU, trading partners.

As a barometer of how well our economy is performing, there is no story more positive than the one emanating from our labour market, where we saw full time employment growth of almost 3 per cent in 2018. More people are working in Ireland than ever before and the unemployment rate, at 4.4 per cent, is significantly lower than that of other Euro Area countries.

Growth in the Irish economy is expected to come from both modified domestic demand, which is set to increase by 4.0 per cent in 2019, and an expansion in Irish exports – which are set to grow by 5.2 per cent this year. Modified domestic demand excludes the volatile components of investment spending – giving a more accurate picture of the health of domestic economic activity.

Ireland’s economic data compare favourably to those of our main trading partners – with growth, unemployment, and inflation performing better than the Euro Area and EU averages - as the data in Table 1 below illustrate. The European Commission Spring 2019 forecasts, published in May, show that the pace of expansion in the Euro Area, the EU and the US is expected to ease. For the Euro Area, the Commission is forecasting growth of 1.2 per cent this year, strengthening slightly to 1.5 per cent in 2020. Growth in the US economy will slow but remain relatively strong at 2.4 per cent for 2019, easing further to 1.9 per cent in 2020. In common with Ireland, unemployment continues to fall in the EU and US, with the US labour market set to tighten further as it approaches full employment. In the UK, unemployment will remain stable as employment growth slows in the context of subdued GDP figures.

The comparatively low level of inflation in Ireland should help to maintain our competitiveness and protect real wage growth. The 2019 IMD World Competitiveness Yearbook recently ranked Ireland as the second most competitive country in the EU and the seventh most competitive country in the world. This should help our economy to continue to perform well internationally – notwithstanding a number of key global risks.

Table 1

Real GDP

Inflation

Unemployment

2018

2019

2020

2018

2019

2020

2018

2019

2020

Ireland (SPU 2019 forecasts)

6.7

3.9

3.3

0.7

0.9

1.1

5.7

5.4

5.2

UK

1.4

1.3

1.3

2.5

2.0

2.1

4.0

4.1

4.2

Euro Area

1.9

1.2

1.5

1.8

1.4

1.4

8.2

7.7

7.3

EU28

2.0

1.4

1.6

1.9

1.6

1.7

6.8

6.5

6.2

US

2.9

2.4

1.9

2.4

2.0

2.0

3.9

3.8

3.7

Source: European Commission Spring 2019 forecasts and Department of Finance SPU 2019 forecasts for Ireland