This week Ibec published its latest Quarterly Economic Outlook, which forecasts GDP growth of 4% in 2019. Strong growth is set to continue, on the back of buoyant investment and rising household incomes. The Outlook makes three key points:
- Household income has now reached record levels, growing at 6% annually. These rising incomes are underpinned by exceptional levels of business investment, and related employment effects, rather than household borrowing. The Outlook cautions that the pace of growth will not last indefinitely, given signs of a global economic slowdown.
- We expect GDP growth of 2.7% in 2020, as both the Irish and global economies reach a mature stage of the business cycle. Our forecasts assume a deal on Brexit is reached. In a no-deal Brexit context, we expect significant negative implications from a sterling depreciation, cancelled investment, falling consumer confidence, rising prices, and significant trade disruption throughout late 2019 and 2020. Growth would more than halve in 2020 and employment growth could be just 0.5%.
- On the domestic front, the biggest challenge facing business is ongoing capacity constraints in the labour market. We expect growing labour shortages will cause employment growth to slow in 2019, as we near full employment and firms struggle to fill vacancies. Ireland’s prime age (aged 25-54) participation rate, at 83.5%, has never been higher.
Ibec will be out again in the media next week on the issue of female labour market participation rates and policy measures to alleviate some of these pressures. I will cover this in more detail on Friday 3 May when Ibec’s economics and tax team and I will host our quarterly members economic briefing and coffee at 8.30 - 9.45 am. I look forward to seeing you then, please register here to attend here. Also you are invited to listen to the latest Ibec economic podcast with Senior Economist Gerard Brady here, or read the full report here.
These are busy days for Ibec. By now you will have received details of our European Parliament election hustings, which promise to prise the business issues out in the debate. For details click here. Over the coming weeks we will also be campaigning on the Local Government election and will host an event to debate the merits of directly elected mayors. This happens at 8.30 am on Wednesday 1 May at the Strand Hotel, Limerick. To register click here.
Finally, over a private breakfast yesterday, I met with Nancy Pelosi, speaker of the US House of Representatives, along with Chairman of the Ways and Means Committee Richard Neal. The discussion focused on the Good Friday Agreement and the future of the all-island economy, in the context of Brexit. I took the opportunity to communicate the effort of business through the Ibec-CBI Northern Ireland Joint Business Council, which continues its endeavours to bring business leaders together. Peace needs to be underpinned by prosperity, which in turn requires continued mutual investment between Ireland and the US.
Happy Easter and enjoy the break.