DUBLIN, Ireland - Exports to Europe and the UK are losing momentum, whilie the domestic economy is moderating, according to the Irish Government’s Stability Programme Update 2019 which was released on Tuesday.
Finance Minister Paschal Donohoe, whose department is responsible for the report, warned that Ireland cannot be complacent as "there are serious risks on the horizon," not the least of which is Brexit.
The update sets out revised macroeconomic and fiscal forecasts for the next 4 years. The macroeconomic forecasts underpinning the Stability Programme were endorsed by the Irish Fiscal Advisory Council on 5 April.
Since the publication of the Department of Finance’s autumn forecasts on Budget day, the report says the external environment has become more challenging. From an Irish perspective, the pace of growth has slowed in key export markets, with a loss of momentum particularly evident in both the euro area and the UK.
At the same time, some domestic indicators have moderated in recent months. Accordingly, the department says it has revised down its forecast for GDP by a quarter of a percentage point for this year and next.
Notwithstanding the downward revision to the growth projection, the forecast for the budgetary position has been revised upwards, with a surplus of 0.2 per cent of GDP in prospect for 2019. This reflects the very strong performance of corporation tax in the final quarter of last year and in the first quarter of this year.
"Despite the less favourable external environment, the Irish economy remains in a strong position, and this is paying dividends in the labour market where an additional 50,000 jobs are expected to be added this year. We have also confirmed that the General Government Balance moved into surplus in 2018 for the first time since 2007. This reflects the hard work that has been undertaken and the right policies pursued to get us to this point," Finance Minister Paschal Donohoe said Tuesday.
"We cannot be complacent, however, as there are serious risks on the horizon, not least of which is the nature and timing of the UK’s exit from the European Union. It is absolutely vital that we continue to build up our fiscal defenses, so that we can continue to support the economy, and provide for society, if, and when, these risks materialise," minister said.