The Central Bank of Ireland published today it’s 2017 Macro-Financial Review. The report gives an overview of the Irish economy and the state of its financial environment. The aim of the report is to help protect the interests of the Bank’s stakeholders, these include: the Irish people, national and international authorities, and other participants in the financial market.
Sharon Donnery, the Central Bank’s deputy governor, introduced the report in a speech this morning. She states that the state of the general economy is improving, but also mentions a few outstanding issues that have the potential to negatively impact the economy’s improvement.
The report notes that much of the uncertainty in the Irish economy is a consequence of Brexit. The depreciation of the sterling against the euro and decreasing consumer spending in the UK has already put a burden on export industries. Uncertainties relating to Brexit may also arise from new trade barriers, trade policies and changes in international taxation.
On a national level, household indebtness has been improving, despite people in the 30-44 age group still being disproportionally more in debt. Household credit has also been steadily decreasing, with an increasing proportion of new mortgages being those with fixed rates. The number of mortgages in arrears has decreased by 44% over three years, overall representing the development of a more stable fiscal environment.
Despite the declining levels of household credit and debt, housing and rent prices have been increasing. This is due to a shortage of housing supply, which will constrain growth and investment if not fixed in the long term.
Overall, the Central Bank predicts the Irish economy to grow by 3.5% in 2017 and 3.2% in 2018, but the effects of Brexit may adversely affect these trends.