Economic growth will continue to slow, according to latest forecasts
Growth in the economy has slowed and will slow further, forcing the Government to revise downward its growth forecasts for this year and next.
Brexit, trade wars and other major factors have led to a “soft patch” in the global economy which Ireland must be prepared for, the Government has warned.
Despite this, Minister for Finance Paschal Donohoe says an additional 50,000 jobs are to be created this year.
Publishing the Government’s latest Stability Programme Update (SPU), Mr Donohoe's department downgraded its growth forecasts for this year and next to 3.9% and 3.3% to reflect what it described as “a deterioration in key export markets”.
This is down from the 4.2% projection for 2019 and 3.6% for 2020 given on Budget day.
The department’s latest projections are slightly lower than its autumn forecasts.
“Since the publication of the Department of Finance’s autumn forecasts on budget day, the external environment has become more challenging,” the department said.
At a press briefing, Mr Donohoe's chief economist John McCarthy said the economy reached its economic peak mid-way through last year and has moderated since.
“From an Irish perspective, the pace of growth has slowed in key export markets, with a loss of momentum particularly evident in both the euro area and the UK,” the department warned.
The department also highlighted a slowdown in some domestic indicators.
Notwithstanding the slowing pace of growth, the department still expects to run a modest budget surplus of 0.2% of gross domestic product (GDP) in 2019 on foot of larger-than-expected corporation tax receipts in the final quarter of last year.
The Government ran a budget surplus last year for the first time since 2007 thanks in the main to record business tax receipts.
The modest surplus of just €50 million will be built upon this year, the minister said.
“Despite the less favourable external environment, the Irish economy remains in a strong position, and this is paying dividends in the labour market where an additional 50,000 jobs are expected to be added this year,” Mr Donohoe said.
“We have also confirmed that the General Government Balance moved into surplus in 2018 for the first time since 2007.
"This reflects the hard work that has been undertaken and the right policies pursued to get us to this point,” he said.
