Ireland beats forecasts with 5.2% growth

The Central Bank had estimated 4.1 percent growth for 2016.

Ireland beats forecasts with 5.2% growth

World Bulletin / News Desk

The Irish economy grew by a stronger-than-expected 5.2 percent last year in spite of the decision by its biggest trading partner Britain to leave the EU, according to the latest official accounts published Thursday.

Ireland’s Gross Domestic Product (GDP) easily continued to outperform EU average growth of just under 2.0 percent despite uncertainty caused by the UK vote and resulting fears over an impending ‘hard Brexit’, which would see the return of physical customs’ barriers between the two jurisdictions on the island.

In the fourth quarter of 2016, GDP rose 2.5 percent. While this was slower than the previous quarter’s 4.0 percent, it was still more than double most economists' predictions.

The 2016 accounts suggest strong growth in every sector of the economy and while it is a long way short of the 26.3-percent declared for 2015, this headline figure was heavily distorted by multinationals operating in the eurozone nation.

Following the universal criticism of those figures, which US economist Paul Krugman dubbed "leprechaun economics", Ireland’s statistics office announced it would overhaul the way it compiled data to better reflect real economic activity.

Since the end of an era of austerity following a collapse in property prices in 2008, the Irish economy has become the fastest-growing in the EU. Earlier this month, unemployment fell to a ten-year low of 6.7 percent.

The Central Bank has repeatedly cut its growth forecasts since the referendum vote. In January it predicted more modest growth of 3.3 percent for 2017 as exporters begin to feel the tangible effects of Brexit.

However, Alan McQuaid, an economist at Merrion Capital stockbrokers, told AFP growth forecasts would likely be revised upwards on the back of the latest accounts and the impact of Brexit may be further away than first anticipated.

"I think people have been pleasantly surprised by the resilience of the UK and Irish economies after the vote," he said.

"There are undoubtedly risks down the road but the next 12 to 18 months look reasonably good. It is pure speculation what form Brexit will take right now but its real effects will probably not really become apparent for a couple of years."

Last Mod: 09 Mart 2017, 16:44
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