Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context | Oireachtas source

47. To ask the Minister for Finance the extent to which he expects this economy to maintain positive performance over the next five years; if he anticipates any corrective measures arising from external factors; and if he will make a statement on the matter. [10841/16]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 47 and 53 together.

In general, I am greatly encouraged by recent data illustrating the positive performance of the Irish economy. Ireland's recovery is now firmly established and the Irish economy is growing at the fastest rate in Europe - with growth of 7.8 per cent recorded in 2015. In the Stability Programme Update or SPU, published at the end of April, my Department forecast that the economy would grow by 4.9 per cent in 2016, by 3.9 per cent in 2017, and by 3.25 per cent on average over the remainder of the forecast horizon out to 2021.

Crucially, domestic demand made a strong positive contribution to growth in 2015 with consumption increasing by 3.5 per cent in 2015 and investment up by 28 per cent. This is important as domestic sectors are both jobs-rich and tax-rich. The external sector is also showing continuing signs of growth, with exports increasing by 13.8 per cent in 2015. The competitiveness gains achieved since 2008 have been the result of productivity improvements and wage and price moderation. It is important that these gains are maintained through active policy management, to support continued growth through both foreign direct and indigenous investment.

The recovery is most clearly evident in the labour market where we have now seen thirteen successive quarters of employment growth. Employment grew by 2.6 per cent in 2015, equivalent to 50,000 new jobs. The monthly unemployment rate fell to 8.4 per cent in April, down from almost 10 per cent a year earlier. The unemployment rate is now at the lowest level since 2008.

The positive outlook for Ireland's economic prospects is shared by the 3 major credit ratings agencies. Following Moody's upgrade to an A rating, all 3 have now given an A-Grade to Ireland's sovereign debt.

Nevertheless, the SPU highlights that there are several sources of uncertainty at present. In particular, a more disruptive international environment could generate significant headwinds for the Irish economy.

This uncertainty highlights the importance of prudent management of the public finances and of competitiveness-oriented policies that would help the Irish economy to weather any global economic downturn that may emerge.

In summary, subject to a supportive external environment, I am confident that the positive economic performance will be maintained over the medium term. However, this is critically contingent upon implementing appropriate polices. That is what the Government intends to do.