Written answers

Wednesday, 11 July 2018

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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77. To ask the Minister for Finance the extent to which the economy continues to grow in a sustainable way in keeping with best practice and competitiveness, having particular regard to all the challenges ahead including Brexit; and if he will make a statement on the matter. [30965/18]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Recent economic indicators have generally been positive, indicating that the recovery is continuing in a sustainable manner.

Preliminary real GDP growth of 7.8 per cent was recorded for 2017, but this is heavily distorted by activity in the multinational sector. Modified domestic demand, which adjusts for distortions in the data, is up 4.0 per cent in 2017.

The strength of domestic demand is evident in the labour market. Employment growth remains strong with an annual rate of 2.9 per cent recorded in 2017, representing over 61,000 additional jobs. The momentum in the labour market has continued into 2018 with data for the first quarter again showing employment growth of 2.9 per cent. As a result, there are now more people working in Ireland than ever before.

Other recent data confirm that momentum in the economy has continued into 2018:

- Core retail sales, i.e., excluding car sales, are up 4.5 per cent in the first 5 months of the year compared to the same period in 2017.

- Export growth has been very strong with the volume of exports increasing by 18.7 per cent on an annual basis in the first four months of the year.

- The monthly unemployment rate for June was 5.1 per cent, down from its peak of 16 per cent in early-2012.

While the unemployment rate is close to levels which could reasonably be called full employment, data on wage developments and consumer prices suggest that from a macroeconomic perspective overheating pressures are currently limited. However, there is no scope for complacency with overheating the principal domestic risk we face. As set out in the 2018 Summer Economic Statement, it is crucial that we continue to prudently manage the public finances to avoid pro-cyclical policies.

While the economic situation is relatively healthy at present, the external environment is becoming increasingly challenging. The UK’s imminent exit from the European Union, changes in the international corporate tax landscape, and the possibility of disruptions to the global trading system are some of the principal external risks facing the Irish economy at present.

As well as ensuring that the public finances continue to be managed in a prudent fashion, the best way to mitigate these and the other risks we face is to improve the resilience of the economy. The Government will play its part by continuing to implement competitiveness-oriented policies – including those that address emerging bottlenecks.

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