26 Jan 2018 | 01.05 am
Central Bank Forecasts 4.4% Growth In 2018
Prediction is revised upwards
26 Jan 2018 | 01.05 am
The Central Bank of Ireland has revised upwards its GDP growth forecast for 2018 to 4.4%, with demand from Ireland’s main trading partners expected to be somewhat stronger in 2018 than CBI expected at the time of the previous forecast
CBI is expecting a moderation in GDP growth at 3.9% in 2019. Employment is expected to grow by 2.2% in 2018 and 1.8% in 2019. This would see an additional 89,000 people in work and overall employment levels at 2.3 million, in excess of the pre-crisis (2007) peak level.
A pick-up in headline inflation to 0.7% in 2018 and 0.9% in 2019 is forecast as the recent negative impact on goods prices, driven largely by the fall in sterling and cheaper imports, moderates and prices for services increase.
Mark Cassidy, the Central Bank’s new Director of Economics and Statistics, said: “The outlook for Ireland’s economy is largely positive, driven by broad-based growth in employment, which has boosted incomes and consumer spending.
“Our outlook brings the prospect of full employment into view as the unemployment rate is projected to fall to just over 5% next year. Average earnings are also expected to increase, by 3.2% this year and 3.4% through 2019,” said Cassidy.
“Brexit continues to be the big unknown in terms of future trading conditions with the UK. And with such solid growth, the risk of economic overheating – or boom and bust economic cycles – means that we continue to urge prudence in public spending in support of stable growth.”
The Bulletin analysis notes that loan repayments by non-financial private-sector enterprises continued to outstrip borrowing during 2017, albeit to a lesser extent than in previous quarters.
In the third quarter of 2017, net lending to Irish private-sector enterprises (excluding financial intermediation) declined by €943m, when measured as a four-quarter moving sum. This was the lowest level of decline since June 2009.
Examining the sub components of overall net lending by Irish enterprises reveals diverging trends. Property-related sectors, which borrowed heavily during the crisis, continued to make net repayments on loans from credit institutions.
When property-related entities are excluded, private-sector borrowing exceeded repayments by €277m at end-September 2017, when measured as a four-quarter moving sum. On a net basis, small- and medium-sized enterprises (SMEs) continued to repay loans with credit. At September 2017, however, net lending to SMEs was at its highest level since the series began.
Gross new lending to SMEs over the 12 months to September 2017 totalled €4.8 billion. This represents an increase of €547m compared with the previous year. The core sectors with the largest gross new lending over the past 12 months were wholesale/retail (€885m), the primary industries (€851m) and manufacturing (€439m).
Between Q3 2016 and Q3 2017, interest rates on new lending to SMEs increased by 4 basis points.