The European Commission has said that Ireland`s GDP is forecast to expand robustly over this year and next but that the pace of growth will moderate.
In its spring economic forecast, the Commission has predicted Irish GDP growth of 4% for this year and growth of 3.6% for next year. The Commission said that improving labour market conditions are expected to support domestic demand over the next two years. It predicted that the unemployment rate will fall to 5.9% in 2018, while employment trends will also remain positive.
But the Commission warned that considerable uncertainty also surrounds the final outcome of talks between the UK and the EU, as well as potential changes to US tax and trade policies, to which Ireland is highly exposed.
"The activities of multinationals could impact GDP growth in either direction," today`s report added. It also said that the country`s public finances are projected to improve but risks to the fiscal outlook remain.
Meanwhile, the Commission today raised its growth forecast for the euro zone as a whole. It said the economic recovery was gaining strength despite the elevated uncertainties of Brexit and the protectionist policies of US President Donald Trump.
The forecast said the positive outlook came in large part thanks to an improving global economy, with the US and China lifting Europe. But the Commission warned in today`s statement that the "uncertainty surrounding the economic outlook remains elevated".
The euro zone will grow by 1.7% in 2017 followed by 1.8% in 2018, the European Commission said in its spring economic forecast. That is compared with predictions made in the winter of 1.6% growth in 2017 and 1.8% in 2018. The protectionist stance on world trade by the Trump administration, Britain`s divorce from the European Union, and the fragility of European banks could all negatively impact the future of the economy, the commission cautioned.
The 28-nation bloc as a whole would grow by 1.9% in both 2017 and 2018, the Commission said.
It is good news too that the high uncertainty that has characterised the past 12 months may be starting to ease. But the euro area recovery in jobs and investment remains uneven," EU Economy Commissioner Pierre Moscovici said.
Souring the mood, bailed-out Greece - which swung out of recession last year but is now at the centre of fresh fears for the eurozone - saw its growth forecast cut sharply to 2.1% in 2017 and 2.5% in 2018 from 2.7% and 3.1% respectively.
RTE Business Section