Economists suggest that the country has built up some resilience to cope with risks outside its control such as Brexit – although this remains the main challenge that Ireland faces.
Latest figures released by the country’s Central Statistics Office indicate that GDP stood at €324bn ($364bn) for 2018, although when the profits of multinationals were stripped out the economy grew at the lower rate of 6.5%.
Its performance is better than anticipated from provisional data in March, and means that Ireland’s debt to GDP ratio is now 63.6%, down from a high of 120% in 2013.
Growth in 2018 was driven by a 10.4% rise in exports but in some sectors, such as ICT, it soared by 21.2%. The labour market is close to capacity and unemployment is below 5%, with Ireland’s economy adding new workers at the fastest rate since its recovery from the sovereign debt crisis began.
Personal consumption of goods and services – seen as a good indicator of activity in the domestic economy – grew by 3.4% in 2018.
Responding to the latest figures, Finance Minister Paschal Donohoe indicated that recent growth momentum continued in the second quarter but pointed to “continued softness in the international environment” and Brexit for underlining a need for careful economic management, reported Reuters yesterday.
Irish GDP has outperformed the rest of the EU every year since 2014 and while growth has been distorted in recent years by the presence of large multinational corporations in the country, analysts suggest that its strong recent performance indicated a capacity to cope with future economic shocks.
A no-deal Brexit poses the main risk to Ireland’s economy, which is “uniquely vulnerable” to events in the UK, the IMF warned last month.
It said that the government may have to launch a fiscal stimulus, depending on the severity of any downturn that may be caused by Britain’s withdrawal from the EU. Irish authorities should continue preparing for Brexit while strengthening fiscal buffers and addressing bottlenecks to growth, the IMF recommended.
