Tuesday 16 July 2019

Brexit fails to slow recovery as growth forecasts increase

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Donal O'Donovan and Charlie Weston

The Central Bank has radically increased its forecast for economic growth this year, but warned that Brexit remains a concern in the longer term.

An extra 60,000 jobs this year will push the number of people at work to 2.1 million, a number last seen a decade ago, although the overall population is now higher.

In its third Quarterly Bulletin for 2017, the Central Bank forecast the Irish economy to grow by 4.5pc in 2017 and 3.6pc in 2018. That is dramatically higher than the previous forecast of 3.5pc growth in 2017, and a 3.2pc increase in 2018.

It suggests growth is running at the same level as last year, when Ireland was the fastest-growing economy in the euro area. While the revision is big, it brings the Central Bank forecast in line with, though slightly higher than, Department of Finance forecasts for 2017 growth of 4.3pc. The numbers suggest Brexit and the plunge in the value of the pound are having a much less negative impact on Ireland than initially expected.

The Central Bank said the domestic economy gains in employment and incomes were expected to remain the main driver of growth, but forecasts for export growth had also been revised higher - reflecting a recovery in the euro area.

Risks to the economy were mainly external, the Central Bank said.

However, it noted that using the new CSO economic measurement of modified gross national income, which excludes the effects of globalisation, debt levels here were notably higher than traditional measures would indicate.

Separate figures from the CSO show a fall-off in purchases of new cars, which meant total retail sales fell last month.

But when car sales are excluded, there was a rise in retail sales volumes in June, according to new figures from the CSO.

The monthly rise, when motor sales are excluded, was 0.8pc, while over the last year there was a rise of 7.1pc.

The CSO said that when car sales were included, headline sales were down 4.8pc in the month in June, but were 4.1pc higher in the year, in volume terms.

Irish Independent

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