The moderate recovery and gradual economic rebalancing is projected to continue. Exports will remain the main driver of growth, making Ireland’s outlook largely dependent on developments in trading partners. Domestic demand is projected to gradually strengthen. Business investment should pick up asmultinational enterprises continue to build up their production facilities. The unemployment rate is expected to decline only slightly, reflecting the slow recovery in labour-intensive domestic sectors and persistent skill mismatches. On the assumption of full policy implementation, the fiscal deficit should continue to decline through the projection period.
Financial market confidence has improved but the bank lending environment for firms and households remains adverse. It is essential to make faster progress in dealing with non-performing loans. Decisive labour-market reforms are also needed to address the prospect of persistent high longterm unemployment, especially among young people, in particular by putting more resources into activation measures and better aligning skills with employers’ needs. For Ireland to successfully exit the official lending programme, maintaining the strong record of fiscal policy implementation will be essential, although the automatic stabilisers should be allowed to operate.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.
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