How is Ireland’s economy performing?

The prospects for the Irish economy are good and there’s a lot of positive momentum right now. What we have now is a strong economy that is not being driven by credit, which is a little bit unusual in the historical context of Ireland. However, tail risks (such as Brexit) for the Irish economy are also going up. Tail risks are hard to model but if they did happen they can have a material impact on the economy.

Is Ireland’s unemployment rate falling?

Employment is now back to 2.2m people. The return to full employment in Ireland is in sight, although we’re not quite there yet. Next year we are forecasting unemployment to fall to 5.2%, which compared to the peak in unemployment of 15.2% in 2012 is a really transformed labour market. Of those employed, more are working full time with the average working week climbing from 34.9 hours to 36.7 hours per week.

In what sectors are people employed?

The nature of employment in this country is now much more balanced than it was before the crash. In 2007, 1 in 9 people worked in construction. Today, it is 1 in 16 people.

Are wages rising in Ireland?

We’re seeing some acceleration in wages and we think this will continue in 2018 and into 2019. Rising wages, combined with a low inflation rate in Ireland means people will have more purchasing power.

How will Brexit impact Ireland’s economy?

So far Ireland has been able to absorb the effects of Brexit. But our economy is especially exposed to Brexit given our unique relationship with the UK. I think the two factors to watch out for in the short term are UK GDP and a further move in the sterling-euro rate. Through all sorts of channels, what happens to UK GDP feeds through in the Irish economy. The depreciation in sterling has effected exporters to the UK market but it’s also acted as a windfall for Ireland thanks to cheaper imports from the UK including consumer durables such as cars.

How is the Eurozone economy performing?

The Eurozone area recorded economic growth of 2.5% in 2017. This year the forecast is for growth of 2%, which is pretty decent in the history of the euro area. Unemployment across the Eurozone has fallen to 9.1% and we project it will fall to 7.2% by 2020. In the history of European labour market this is a very strong performance.