Generally speaking Danny McCoy is the most optimistic man in a room. Hail, rain or shine, he usually only sees positives for the future of the Irish economy. Definitely a glass half-full merchant.
At the depths of post-2008 recession, the Ibec chief executive was certain that Ireland would bounce back strongly in spite of significant evidence at the time to the contrary. How right he was, with Ireland being the fastest growing economy in the euro zone in recent years and heading again for boom territory.
So should we be worried when he produces a GDP growth forecast of 4.1 per cent for next year that is marginally below the Government’s own target and some way behind an expected outcome of about 7 per cent for 2018? The growth tapers to 2.9 per cent in 2020.
Ibec said that "feedback from its members suggests that many sectors are facing a more difficult period in the months ahead due to a weak sterling and continued Brexit uncertainty".
This appears to be feeding through to some businesses holding off on hiring or investment decisions until there’s an outcome to the UK’s Brexit withdrawal agreement. It’s worth noting that Ibec’s 4.1 per cent forecast assumes a Brexit deal is reached, which is looking dicey.
A no-deal Brexit would make 2019 “more challenging”, it added.
The employers group also argued that Ireland was at a “mature phase” of the business cycle, with the economy close to capacity. McCoy has been cautioning for some time against using last year’s corporation tax windfall for day-to-day spending, arguing that it would be better deployed on key infrastructure that could make the economy more productive in the long term.
Growth was also bound to slow given that the ECB has stopped its quantitative easing programme, and interest rates are likely to rise at some point.
And most countries would be delighted to achieve GDP growth of 4.1 per cent a year. In Irish terms, it equates to about €1 billion a month of additional activity in the economy, which is not to be sniffed at.
It’s a level of growth we thought we’d never again reach during the Troika bailout years. Everyone except McCoy.
