DUBLIN (Reuters) - Ireland is set to increase its economic growth forecast for this year to between 4 and 4.25 percent but updated figures due next week will reflect increased uncertainties led by Brexit in later years, the head of the finance department said on Wednesday.
Ireland’s economy was the best performing in the European Union for the third year in a row last year after gross domestic product grew by 5.2 percent, beating forecasts that were trimmed back following neighbouring Britain’s vote leave the EU.
In its last update in October, the finance department saw GDP growing by 3.5 percent in 2017, but it said on Wednesday that it had yet to see a hit from Brexit and there was nothing to suggest that the economy had slowed in the first quarter.
“Quarter three and quarter four (GDP) returns showed that the second half of 2016 was much stronger than had been assumed,” Finance Department Secretary General Derek Moran told a parliamentary committee.
“It would be reasonable to expect the figure next week to improve to between 4 and 4.25 percent for this year.”
The department’s last forecasts predicted that GDP growth would moderate to an average of 3 percent between 2018 and 2021. However, it has since estimated that a “hard Brexit” - in which Britain loses access to the EU’s single market - could knock around 3.5 percent off GDP within a decade.
Moran said he anticipated therefore that “forecasts for the outer years will reflect increased levels of external uncertainty”.
He also said figures on Tuesday that showed that income tax receipts came in 3.9 percent behind target in the first quarter despite continued sharp falls in unemployment were “puzzling rather than worrying” and that the department was unlikely to change its tax revenue forecast for 2017 next week.
Reporting by Padraic Halpin; Editing by Alison Williams