Failure to effectively deliver necessary infrastructure biggest challenge to economic growth

Failure to effectively deliver necessary infrastructure biggest challenge to economic growth

August 22, 2024

• Ibec publishes Economic Outlook
• 2.7% GDP growth predicted for 2025
• Consumer spending to rise by 2.6% in 2024 and 2.9% in 2025.
• Effective delivery of key long-term investment plans crucial for future growth

Ibec, the group representing Irish businesses, today published its new Economic Outlook, forecasting GDP growth of 2% in 2024 and 2.7% in 2025. The report highlights that while the Irish economy is experiencing some moderation in growth after five years of remarkable expansion, the economic outlook remains positive. However, the Outlook also notes that under-delivery in critical infrastructure-such as water, housing, energy, transport, and skills -is constraining the potential for growth in both domestic businesses and foreign direct investment.

Commenting on the report, Ibec's Head of National Policy and Chief Economist, Gerard Brady, said:

"Ireland has clear potential to compete in the years ahead, driven by a skilled and growing workforce, energy resources, and significant improvements in national infrastructure. Successfully delivering on these priorities would be economically transformative for the country. We are now at an inflection point where achieving this vision hinges on our ability to deliver. To reach our potential, we must begin delivering today.

Too often, the focus is on cost efficiency in large-scale projects, but the greater and more immediate risk to economic growth, social cohesion, and fiscal stability lies in our failure to complete these projects. Successfully addressing housing, transport, and water infrastructure, making strategic decisions on funding education and skills, and setting out a transformative vision for our energy future are generational opportunities for Ireland. Unlike in the past, we now have the chance to make decisive progress.

In terms of the global landscape, there are a number of uncertainties which pose a risk to Irish growth prospects. These include the uncertain outlook for global trade policy, the impact of rising geopolitical uncertainty and growing direct competition for Foreign Direct Investment from large economies. We expect Irish exports to grow by 5% in 2024. The longer-term outlook for Irish trade is, however, heavily reliant on global political developments.

As we approach the Budget announcement, the Government faces two choices: to use the Budget as an opportunity to outline a vision for the country we aim to build over the next five years, or to use the surplus to put as much money as possible in people's pockets. Budget 2025 should prioritize global competitiveness by enhancing investment offerings, fostering innovation, and investing in critical skills and infrastructure to drive our economy forward. This can only be achieved by addressing strategic priorities rather than diluting resources with widespread handouts."

Q2 Economic Outlookpdf | 1024.1 kb

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