Republic’s GDP to grow at faster rate than NI, report says

EY forecasts GDP growth of 4.9% this year in the Republic compared with 1.1% in North

The Republic’s GDP will grow three times faster than Northern Ireland this year. Photograph: iStock

The Republic’s GDP will grow three times faster than Northern Ireland this year. Photograph: iStock

 

The Republic’s gross domestic product (GDP) will grow at more than four times the rate of Northern Ireland this year assuming a smooth post-Brexit process, financial services firm EY has said.

GDP, a measure of the economy, will grow at 4.9 per cent this year and 3.8 per cent in 2019 compared to growth in the North of 1.1 per cent this year and 1.2 per cent next year.

EY’s forecast falls below that of the European Commission, which pencilled in GDP growth of 5.7 per cent this year while the Economic and Social Research Institute (ESRI) believes the State’s GDP will grow 4.7 per cent this year and 3.9 per cent in 2019.

According to EY’s summer forecast, the island of Ireland will see net jobs growth of 236,700 up to 2022.

“Ireland’s impressive growth may be somewhat overstated by headline GDP figures, but data on job creation levels and tax receipts all point to a fast-growing economy,” EY chief economist Neil Gibson said.

“The forecast is for headline growth rates to fall back from current levels and job creation will also moderate as a tighter labour market begins to impact,” he added.

EY also addressed the pace of house price growth, something it sees as adversely impacting our competitiveness.

Forecasting double digit rises for both 2018 and 2019, Mr Gibson said “the current rate of increase is unsustainable and it is already damaging competitiveness, with inner city rental costs a particular concern”.

“If Ireland is to remain competitive and continue to grow strongly, improved infrastructure is key. Careful prioritisation of the most economically-beneficial projects will be essential and challenging, given the clear need for most of the investments set out in the National Development Plan,” he said.

Separately, Bank of Ireland found consumer confidence up on last year despite little change in personal finances.

“Consumer confidence has moved sideways in recent months but remains at a high level, while business confidence has strengthened noticeably and is now at a two year high. The strong domestic economy is providing support and the global economy is also expanding,” Bank of Ireland’s chief economist, Dr Loretta O’Sullivan, said.

However, she flagged that recent developments including increasing trade tensions on the back of tariff threats, as well as slow progress in Brexit talks, could “put a dent in the mood”.