Written answers

Wednesday, 18 November 2015

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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24. To ask the Minister for Finance the extent to which he remains satisfied regarding future economic growth prospects, especially in comparison to other European Union euro and non-euro jurisdictions; and if he will make a statement on the matter. [40348/15]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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In Budget 2016, my Department projected the Irish economy to grow by 6.2 per cent this year and by 4.3 per cent in 2016.  This follows strong GDP growth of 5.2 per cent in 2014. To put this performance into perspective, as well as being the fastest growing economy in Europe in 2014, the European Commission expects Ireland to be the fastest growing economy in Europe again this year and also in 2016.

Importantly, economic growth is now better balanced with exports and domestic demand making a strong positive contribution to growth. Growing employment and rising household incomes are supporting an increase in private consumption the sacrifices made over recent years are now paying dividends.

Over the medium term, my Department expects that the Irish economy can grow by around 3 per cent per annum on a sustainable basis. Achieving these growth rates is contingent upon many factors including continued improvements in our cost competitiveness and trading partner growth.

In that regard, the gains in Irish competitiveness achieved since 2008 have been hard-won through productivity improvements, wage and price moderation.

It is vitally important that this competitiveness is preserved and continues to support growth.  We must also be cognisant that recent favourable exchange rate movements and gains from the fall in oil prices may unwind in the future.  Therefore, we need to stay focused on continuing to improve Ireland's competitiveness through other channels such as wage restraint and productivity improvements.

As a key market for Irish exports, it is in all our interests that economic growth in the euro area is revived and this will require a combination of monetary, fiscal and country specific structural reform policies.

On the domestic front, the Government is focused on sustainable public finances, improving access to credit and reforming the income tax system. Our capital investment plan will be used to alleviate supply-side bottlenecks and barriers to growth.

In summary, I am confident that significant economic progress can be made in the years ahead but, crucially, this is contingent upon implementing appropriate polices to ensure continued, balanced economic growth, maintaining our competitiveness and ensuring that Ireland's public finances remain on a stable footing. That is exactly what the Government intends to do. 

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