A slowdown in economic growth in the third quarter will still see Ireland end 2018 as the eurozone’s most dynamic economy, with the expansion likely coming in at 7.5pc for the full year, compared with 1.8pc for the area.
Data released yesterday showed gross domestic product growth here slipped to 0.9pc in the third quarter from the second and that it was up 4.9pc in real terms from a year ago. That compares with annual growth of 8.7pc in the second quarter and 9pc in the first.
Given the volatility of GDP numbers, it is probably wise not to read too much into the headline numbers, but the trend is clear: economic growth remains strong as the country heads into the uncertainties of Brexit.
“The bottom line is that there appears to be no stopping the Irish economic steam train. Real GDP growth last year was 7.2pc and there is every chance that will be bettered in 2018,” said Alan McQuaid of Merrion Capital Group.
Despite concerns over Brexit and the now-tortured treaty negotiations that have hit the pound and came close to claiming the scalp of UK Prime Minister Theresa May this week, exports to the UK have been robust.
In the third quarter, they rose €187mn from a year ago to €5.7bn.
Overall, the country’s current account surplus was €9.1.bn in the third quarter, equivalent to more than 11pc of gross domestic product.
The cumulative total surplus hit €28.8bn for the year to end-September, which is more than the €24.9bn recorded for all of 2017.
That robust external position will help shore up finances as Brexit looms. In 2007, as the country headed into the storm of the banking crisis, the current account was in deficit to the tune of €12.8bn, greatly exacerbating its vulnerability to a sudden stop in financing.
There were also signs of a pick-up in domestic activity, with construction recording a 3.5pc rise in gross value added.
Ireland’s rude economic health contrasts with growing concerns over the outlook in Europe.
Although the European Central Bank announced the end of purchases of new government bonds at its interest rate setting meeting in Frankfurt yesterday, it signalled concerns over the outlook for the euro area. The ECB forecasts for growth were revised down from 1.9pc this year to 1.7pc in 2020 and 1.5pc in 2021. It also cut 2019 inflation outlook to 1.6pc.
“This is an acknowledgement of a softer run of data and weaker market sentiment. I’d read it as a heads-up to the markets that the ECB will need to consider pushing out their rate hike guidance, possibly in March, if the first quarter economic data doesn’t show improvement,” said Ronan Costello, head of Euro money markets at Bank of Ireland.
ECB chief Mario Draghi had indicated that interest rates could start rising from autumn, although a continuation of loose monetary policy could help Ireland deal with some of the Brexit drag on the economy.
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