Economy to grow 6.5% this year driven by exports, says Ibec
Employers’ group Ibec has forecast that the economy in Ireland will grow 6.5% this year driven in the main by strong exports.
However, in its latest Quarterly Economic Outlook, it also predicts that unemployment will remain high at 15.6% in 2021, falling to 9.3% next year.
The organisation thinks consumer spending will bounce back from negative territory last year to grow 6.4% this year.
But it also forecasts that investment will continue to contract, falling by 21.8% in 2021 before rising by 8.8% next year.
“The economy is set to emerge strongly from the Covid crisis,” said Gerard Brady, Ibec chief economist.
“The first half of 2021 has seen the export engine of Ireland’s economy continuing to fire and a level of normality is now returning to most domestic sectors.”
Ibec expects exports will continue to power ahead, rising by 5.3% this year before increasing further to 6.3% next year.
But it is also cautioning that inflation will continue to rise, up 1.2% this year and rising further to 2.1% in 2022.
The employers’ body has also called for a renewed focus on greater fiscal and competitiveness discipline.
“From a business perspective, the enthusiasm from reopening has been somewhat dampened by growing fears of competitiveness pressures driven by both rapid international price increases on key goods and freight, and by domestic policy,” Mr Brady added.
“Whilst strong activity on reopening will be welcomed by business, these additional costs may mean significant margin compression and profitability challenges for some.”
Mr Brady said the Government also needs to ensure resources continue to be available and used strategically to fix priority economic challenges, including housing, infrastructure, climate change and population ageing.
“Ireland faces some unique challenges in the post-Covid era,” he said.
“We have obvious long-standing infrastructural deficits, significant Government policy commitments in areas like health, pensions and the labour market, and hugely ambitious climate targets to meet.
“We are also facing threats to our business model from global corporate tax change. All of these will have challenging implications for economic growth, business competitiveness and tax revenues in the months and years ahead.”