Bernard Durkan (Kildare North, Fine Gael)
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22. To ask the Minister for Finance the extent to which economic indicators reflect improvement in the economy on an annual basis in each of the past three years to date; the extent to which such trends will continue with resultant ongoing benefit to the economy; and if he will make a statement on the matter. [45949/14]

Michael Noonan (Limerick City, Fine Gael)
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The Government's principal strategy for economic and budgetary policy for the last number of years has been to put the economy and the public finances on a more stable footing.  Through the implementation of substantial adjustments, significant progress has been made in restoring fiscal stability and economic growth. The recovery in employment began in 2012 and by the third quarter of this year we have seen eight successive increases in employment with over 80,000 more jobs in the economy than at the low point just over two years ago. 

The recovery has taken longer to become evident in the headline GDP numbers with essentially zero growth recorded in 2012 and 2013 cumulatively. While the underlying performance of the domestic economy was positive, developments in the pharma-chem and ICT sectors served to weigh down on GDP. The data so far this year would suggest that this effect is over, with GDP growth of nearly 6 per cent recorded in the first half of this year. My Department is forecasting full-year GDP growth of 4.7 per cent this year. This is being driven by strong growth in exports but domestic demand indicators such as industrial production and retail sales are both in positive territory. This recovery has manifested itself in tax revenues which are expected to come in €1 billion (or 2.5 per cent) above original expectations.

Turning to fiscal policy, the macroeconomic and fiscal framework underpinning Budget 2015 was more favourable than anticipated. This was down to positive economic developments over the summer, an increase in tax revenues compared to profile as well as a reduction in national debt interest costs.  This allowed the introduction of a package of income tax reductions and expenditure increases amounting to €1,050 million in Budget 2015, or about 0.6 per cent of GDP.  This package is likely to have a positive short-run impact on aggregate demand in the economy compared to an alternative of no policy change. It is estimated that the Budget package will add 0.3 per cent to real GDP in 2015 and an additional 0.2 percentage points to employment growth. 

Over the medium term my Department is forecasting average annual growth of just over 3 per cent in the 2015-2018 period. This is driven by a positive contribution from net exports on the back of economic growth in Ireland's trading partners.  Domestic demand is set to contribute to growth as well, with growing employment and rising household incomes resulting in an increase in private consumption.