Synchronous growth was the term used in early 2018 to refer to the unusual conditions prevailing at that time in which all of the world’s major economies were enjoying growth.
Sadly, less than a year later, cracks are already beginning to appear. Global trade wars, Brexit, vulnerabilities in emerging markets, and closer to home in Italy, have led to a growing nervousness about the economic outlook.
Republic of Ireland
The Republic of Ireland (ROI) is so far unaffected by the increasing global anxiety, with growth forecasts again revised upwards and the labour market continuing to expand rapidly. However as a very open economy, the growing global concerns should not be ignored.
Northern Ireland (NI), in contrast, is growing only modestly. An impressive level of job creation remains noteworthy and is currently more useful for comparing growth in both countries than GDP. Indeed, due to the level of job creation in NI, our forecasts have been revised upwards for 2018 and we now expect NI to have enjoyed growth at a rate similar to the UK.
|EY growth forecasts|
Source: EY Economic Eye, UK ITEM Club
*Modified domestic demand removes the impacts of IP relocation and aircraft leasing, giving a more accurate picture of the domestic economy.
Divergence in growth forecasts becomes more prominent on the island as 2018 enters its final quarter
ROI 2018 growth is projected at more than six times Northern Ireland’s, at 8.2% and 1.3% respectively. 2019 sees this gap narrow to 4.4% and 0.9%. Looking across a basket of indicators, the 2019 outlook remains positive for ROI and weaker for NI, with employment expected to fall as consumer pressures and the fall-out from Brexit take effect.
460,000 jobs have been created across the island in the last six years and 88,000 in the last 12 months alone. Our forecast for ROI is strong for 2018, and we expect a broad-based job growth of 243,000 to 2023. After 5 years of job growth in NI, we project late 2018 to be a turning point and overall job numbers to contract modestly in 2019, as consumer pressures coupled with Brexit uncertainty take effect.
Real wages and disposable incomes rise strongly in ROI, but only modestly in NI
UK CPI inflation is currently running at 2.4%, while NI wage growth is expected at 2.5%, meaning only a modest increase in purchasing power.