Irish businesses will find the new year “tougher going” but the country’s economy should still continue to “prosper” for the rest of the decade, according to accountancy giant EY.
In its latest economic outlook, EY forecast that Irish GDP should grow by 3.1% this year and 2.9% next year, with consumer spending — being bolstered by low inflation and increased employment — increasing by 2.7% per annum over the next four years.
That increased employment, it added, will be driven by jobs growth in the retail, health and education sectors gathering pace.
“With uncertainty ahead of us, any economic forecasts must be highly conditional at this point, and that is likely to be the case for at least the first half of 2017 as divorce negotiations between the UK and the EU continue.
"However, the island economy — and the Republic in particular — enters this turbulent period in ruder health than might have been expected, with employment rising and growth in Ireland continuing to top the European charts,” said EY economic advisor Neil Gibson.
“The 2016 data tells us, clearly, that firms — though they may be worried — will continue to go about their business until such time as the trading conditions change.
"This means the island economy enters 2017 in a fairly robust state, but with volatility and the spectre of inflation in the UK on the horizon, the New Year is projected to be tougher going,” he added.
EY has warned, however, that Brexit uncertainties will leave a mark with significant downside risks facing investment and export-orientated sectors.
"Agriculture, too, will be hit, with an estimated 10,500 jobs set to be lost by 2020 on the back of increased costs and the burden of cross-jurisdiction trading, and currency volatility.
“The variety of jobs created recently in Ireland is welcome and is helping to drive down unemployment through the regions, but clearly the potential implications of tariffs and the shifts in the exchange rate, impact more severely on certain sectors than others.
"Though the outlook is for Ireland to create more jobs, much depends on the detail of the exit deal,” said Mr. Gibson.
© Irish Examiner Ltd. All rights reserved