The European Commission’s Winter Economic Forecast has reported that the Irish economy grew by 7.3% in 2017, making Ireland the fastest growing economy in the EU.
This forecast is a welcome increase from the projected 4.8% growth figures published in the European Commission’s Autumn Economic Forecast.
Strong Multinational and Domestic Activity
Whilst 2017 growth was driven by multinational organisations operating in Ireland, it was reported in the Winter Economic Forecast that underlying domestic activity made a notable contribution to Ireland’s overall economic growth; 4.9% in the first three quarters of 2017.
Domestic growth of 4.9% was still double that of the Euro area, further enhancing Ireland’s reputation as a place to do business both locally and internationally.
The European Union
The Winter Economic Forecast reported that growth in the euro area and the EU as a whole have exceeded projections in 2017. According to estimations, the Euro area and the EU have grown at its fastest rate in more than a decade; 2.4% in 2017.
The European Commission also forecast that similar levels of growth are set to continue in 2018 (2.3%) and 2019 (2.1%, recently revised from 2%).
There are a variety of reasons which have been cited for contributing towards 2017 growth, such as an improved labour market and strong global economic activity.
In addition, high utilisation and consumer demand are likely to support future investment resulting in the 2018 and 2019 growth forecasts.
Positive Outlook for Ireland
The Irish economy is set to moderate to 4.4% growth in 2018 and but will continue to be the fastest growing economy in Europe for the fourth consecutive year due to a number of factors such as increases in retail sales and tax revenues coupled with falling unemployment.
The Winter Economic Forecast stated that:
“Consumer spending and construction investment are forecast to drive GDP growth in the short term. Strong employment growth, particularly for full-time jobs, should underpin a rise in disposable income and household consumption over the next two years. Supported by various government policies, investment in construction, both in the residential and commercial sectors, is projected to further contribute substantially to the economic expansion.”
Whilst there are opportunities and challenges ahead for Ireland, such as the impact of Brexit, the Irish economy is booming, with significant progress being made since the global economic crisis in the late 2000s. With a focus now on economic expansion rather than recovery, Ireland has exceeded growth expectations in 2017 and global organisations are reaping the benefits of operating and expanding into Ireland.
As the fastest growing economy in an already resurgent EU, Ireland strengthens the notion that it is one of the success stories of the current European and global economic upturns.
Many multinationals in a range of industries, such as fintech and other technology industries, are continuing to invest and open operations in Ireland as it continues to be a destination of choice and gateway into Europe.