Irelands Short -Term Economic Outlook Quarterly Economic Commentary - PowerPoint PPT Presentation

Ireland’s Short -Term Economic Outlook Quarterly Economic Commentary Summer 2015 Dr. David Duffy

Outlook  GNP to increase by 4.2% in 2015 and 3.6% in 2016  Domestic demand and labour market recoveries continuing  Exports supported by growth in trading partners and by the weak Euro  General Government Deficit of 2.3% this year, 1.2% in 2016

Real GNP to grow by 4.2% in 2015 and by 3.6% in 2016 6 4 2 0 GDP -2 GNP -4 -6 -8 -10 2009 2010 2011 2012 2013 2014 2015 2016

Continuing improvement anticipated in labour market Employment to reach approx. Unemployment rate to be 2 million by Q2 2016 approx. 8% by end-2016 2,200 16% 14% 2,100 12% 2,000 10% 1,900 8% 6% 1,800 4% 1,700 2% 1,600 0%

Growth in personal consumption to increase  Consumption growth 3 increasing 2  1.1% in 2014, forecast 2% in Annual % change, volume 1 2015, 2.4% in 2016 0  Reflects increase in -1 aggregate incomes -2  mainly due to employment growth -3  Consumer sentiment also -4 improving -5  Deleveraging continues to -6 2009 2011 2013 2015 act as a drag on consumption

Investment will be an important driver of growth Overall investment (volume) to increase by 13 per cent in 2015, and 9 per cent in 2016 15  Investment rate at all-time low in last 3 years 10  Increase in housing output 5 Annual % change Strong growth, but levels  0 remain low  Continued FDI to contribute -5 to increase in other b & c -10  Low interest rates, high -15 company savings, improving economic prospects, -20 undertake previously -25 deferred investment 2009 2011 2013 2015

Contribution to growth Percentage points 10 8 6 4 2 0 -2 -4 -6 -8 -10 -12 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Domestic demand Net Trade GNP

Economic Assessment  Strong recovery set to continue in 2015, 2016  Growth of 4.2%, 3.6%  Nowcasting shows 1% growth in both Q1 and Q2  2016 unemployment 8.3% (annual average)  Strong foreign demand  Euro area improving but remains a downside risk  Investment still set to contribute strongly  2015 housing supply to be weaker than expected  Consumption growth supported by rising sentiment, employment and incomes