THE Irish economy will grow faster than previously expected as 50,000 jobs are created and consumer spending improves, business group IBEC said in a new report.
IBEC’s first quarterly report for 2014 also said that there are growing signs that recovery is ongoing as it revised up its GDP economic growth projections to 2.9pc as investment in the economy increases by 21.5pc – its earlier prediction was 15.5pc.
This growth will also be driven by higher consumer spending which is expected to increase by 1.9pc over the next 12 months.
IBEC expects unemployment to fall further this year to 10.9pc and 9.6pc in 2015 and added that the actual strength in the economy is not reflected in GDP figures which is being skewed by the so-called pharmaceutical cliff.
It said the effects of this sector coming off-patent has wiped €5bn off the value of Irish exports.
“The recovery is gaining momentum, with spectacular employment growth in the private sector and strong increases in consumer confidence, business confidence and investment. Ireland is on the way back,” said Fergal O’Brien, chief economist at IBEC.
“The 2013 GDP performance was not a true reflection of the current health of the Irish economy – the economy has been performing much better than reflected by the GDP numbers for some time now.
“The employment growth trend actually provides a much better measure of what is happening in the real economy at present.”
However, he warned that threats to our competitiveness, particularly wage pressures, and a fragile European recovery remain a concern.
“Some of these issues are beyond our control, but in a number of areas we have important choices to make. Ibec’s new campaign, An Ireland that works, sets out five key priorities for the next phase of the recovery.”
Reduce the tax burden: Ireland is out of line internationally and our income tax rates, in particular, are too high. Irish consumers deserve a break.
Better government: Poorly designed policy, legislation and regulation add to the cost of doing business and are an obstacle to growth and job creation.
Invest in the future: To meet our future economic needs, we need to spend much more on infrastructure projects, skills and education.
Extend Ireland’s global reach: International debates on tax and EU reform could have major implications for Ireland. We need to influence and shape the agenda.
Promote enterprise and entrepreneurship: Business need to have access to effective enterprise supports, credit and export markets. Risk needs to be rewarded.