Dáil Éireann Debate, Tuesday - 24 July 2018
214. Deputy Pearse Doherty asked the Minister for Finance his views on whether increases in the price of oil constitute a threat to growth in the economy; and if he will make a statement on the matter. [33270/18]
Amharc ar fhreagraIn general, as an energy importer Ireland has benefitted from the steep fall in oil prices since 2014. While oil prices have picked up over the past twelve months, they remain well below their recent peak.
As of June this year, the price of Brent crude oil had increased by around 60 per cent, to c. $76, since June 2017. While oil prices were expected to increase this year, and this is reflected in my Department’s most recent economic forecasts published as part of the 2018 Stability Programme Update, current levels are higher than anticipated.
Despite the recent increases, oil prices in June were still around 32 per cent lower in dollar terms, compared to where they were in June 2014. Nevertheless, increases in oil prices could pose a risk to the economy’s growth prospects inter alia through adversely affecting consumer spending power and corporate profitability. However, it should be noted that consumer price inflation in Ireland remains subdued, as it has been for the past five years, despite the recent strong positive contribution from energy products.
Notwithstanding the increase in oil prices this year, a number of indicators suggest that the strong momentum in the economy has continued into 2018. For instance, data for the first quarter show that GDP increased by 9.1 per cent on an annual basis. While the economy faces a number of risks at present, the prudent economic and fiscal policies implemented over recent years have placed Ireland in a stronger position to weather any shock which may materialise including an oil shock. This is why the Government will continue to implement prudent budgetary policies.
