Economy to grow 5% with jobs, wages and new homes all rising

THE economy looks set to grow almost 5% this year, the Central Bank says in its latest economic forecast.

On the jobs front, it predicts there will be almost 100,000 extra people at work by the end of next year with wage packets expected to rise by 3.3% while inflation sticks below 1%.

It also predicts an extra 23,500 homes will be built this year with another 28,500 next year. However, the forecasts come with a health warning that allow uncertainty surrounding Brexit could knock things off course.

But if the economy performs as predicted it means Ireland would remain one of the strongest growing economies in Europe. The Central Bank reports ‘Economic growth driven by domestic activity and international growth, with positive contribution from both domestic demand and exports. As the economy gets closer to full employment, wages expected to rise at a faster pace.’

Mark Cassidy, the bank’s director of economics, said: ‘Our forecasts for further growth in earnings this year and next, combined with expectations of modest inflation, means rising wages should translate into higher real incomes and greater purchasing power for households.’

With Brexit and a trade war between the US and China to consider, Mr Cassidy added: ‘While the forecasts are positive, we have to remember that the highly open and therefore volatile nature of the Irish economy means we can take nothing for granted.

‘We have extensive links to other economies through trade, technology and finance and so unexpected events could see the growth in our economy thrown off course.’

He warned that while Ireland had ‘absorbed the impact of Brexit with little pain to date… any obstacles to the way the UK trades with the EU’ could reduce long-term living standards and the range of imported goods available here as well as hinder Irish exports.