Quarterly Economic Outlook Q1 2019
Our Q1 2019 Quarterly Economic Outlook forecasts GDP growth of 4% in 2019. This strong growth is based on the back of buoyant investment and rising household incomes. Household income per-person has now reached record levels and household income is growing at 6% annually. These rising incomes are underpinned by exceptional levels of business investment, and related employment effects, rather than household borrowing. In this Quarterly Outlook, we warn that this pace of growth will not last indefinitely as the global economy shows signs of slowing. Highlights from the report include:
The Irish economy is in a sweet spot, with growth in employment and wages both hitting close to 3% in 2018. Household incomes are growing by 6% and disposable income per person is now back above its peak levels for the first time. No other economy in Western Europe has greater momentum coming into 2019, but this pace of growth will not last indefinitely. The six months of additional time given to the Brexit process is welcome as it avoids an imminent cliff-edge. However, it has also left business to manage the rolling, costly uncertainty.
Outside of Brexit there are signs of a slowdown coming in many of our other key trading partners. Germany has flirted with recession over recent months, Chinese growth last year was its lowest since 1990, and US financial markets are beginning to show signs of strain.
For 2019 Ibec forecasts that growth will slow to 4% and to 2.7% in 2020 as the Global economy softens. If a solution to Brexit is not found before October then we expect significant impacts from a sterling depreciation, cancelled investment, falling consumer confidence, rising prices, and significant trade disruption in 2020.