Economy to grow by 4.4% this year but threats loom

Ratings agency DBRS concerned about impact of both Brexit and US tax policies

Known unknown: DBRS said Brexit is one of the main threats to Irish growth but pointed to lack of clarity over the issue. Photograph: EPA

Known unknown: DBRS said Brexit is one of the main threats to Irish growth but pointed to lack of clarity over the issue. Photograph: EPA

 

The Republic’s economy will expand by 4.4 per cent this year, according to international ratings agency DBRS, which warns that Brexit and US tax policies are the main threats to growth.

DBRS, which rates countries and organisations on their ability to repay their debts, confirmed the Republic’s rating of A (high), indicating that the State it is a good bet for lenders and should pay minimal interest on borrowings.

The agency predicted that gross domestic product, a measure of all the wealth generated by the Republic, should grow by between 3 and 4 per cent over the next few years. It estimates that the economy grew by 7.3 per cent last year.

Subdued Brexit effects

DBRS said that the UK’s exit from the EU is potentially negative for the Irish economy, but noted that the effect so far had been subdued. DBRS also pointed out that last December’s deal between Brussels and London appeared to rule out a hard Border with the North.

“Lack of clarity over how multinational firms operating in Ireland will respond to the change in US trade and tax policy poses a second external risk,” DBRS said.

The agency added that recent reductions on company profits in the US could cut future multinational investment in the Republic.