Goodbody upgrades outlook on Irish economy, but Brexit the 'wildcard' for assessing prospects

Goodbody has upgraded its outlook on the Irish economy.

The stockbrokers now expects domestic demand growth of 6pc in 2018, up from 4.8pc previously.

Growth of 4.4pc is anticipated in 2019, according to the ‘Q4 Irish Economy Health Check’ from the group.

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Consumer sentiment, business investment and the construction sector have been the key drivers in the “exceptional” 7pc growth achieved in the first half of 2018.

However the report warns that Brexit remains the most important uncertainty around prospects for 2019 and beyond.

“The wildcard in assessing the prospects for the Irish economy in the coming twelve months is of course Brexit,” Dermot O’Leary, chief economist at Goodbody, said.

However it also noted that there is evidence that Ireland is becoming the most popular destination for firms looking for an EU base in the post-Brexit world.

The report also looks at the labour market and finds that there are few resources not being used, as evidenced by a labour market which is very close to full employment.

There is some scope for participation to increase, but this will be a slow process.

“Migration provides an important source of labour, but this is not available to the same extent as in the mid-2000s,” Mr O’Leary, said.

“We believe further skills shortages and upward wage pressures are likely given the expected further fall in unemployment to 4.5pc.”

On the issue of housing, the report finds that supply needs to double again to reach the estimated level of household demand.

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