By Staff Reporter

The Irish economy will continue to experience a strong and broad recovery, Metro Éireann has learned.

In the latest Friends First Economic Outlook report, chief economist Jim Power said the Department of Finance budget-time growth forecast of 3.5 per cent appears conservative.

Real GDP should be capable of expanding by up to 5 per cent in 2018, he added.

This growth is expected to be driven by factors, including ongoing improvement in the global economy which should prove supportive of the Irish export sector, and improvements in the Eurozone offsetting predicted weakness in the UK economy due to Brexit.

Power says consumer spending should be supported by employment growth of 2.9 per cent, an average wage growth of around four per cent, a modest easing of the tax burden, and growth of around six per cent in personal disposable incomes.

The report states the investment performance in 2017 was distorted by multi-national transactions, but these should feed out of the system in 2018. Construction output, Power noted, should expand strongly and business investment expenditure should also expand quite strongly.

But the economist also warned that the housing crisis would likely hit economic growth, with national average house prices set to rise by at least 10 per cent in 2019.

“The pressure on Ireland’s corporate tax system; the inordinate economic and financial dependence on a small number of very large companies; the damage that the housing situation is doing to competitiveness; and the impact that inflated measures of GDP are having on the fiscal parameters are key risks and challenges that will need to be monitored and managed very carefully in 2018 and beyond,” Power says.