Ireland’s GDP is now forecast to grow at a rate 3.7%, down from a previous forecast of 3.9% growth, according to the Irish Business and Employer Confederation’s Q4 Quarterly Economic Outlook. The 2017 GDP forecast was also lowered to 2.8% from 3.2%.

The organization, which represents Irish business, said increased global and European economic and political uncertainties brought into sharp focus the need for sensible economic and labour market policies at home. Despite the downward adjustment, jobs growth is set to continue, with employment levels expected to return to 2006 peak levels by the end of next year, with employment growth approaching 2.4% for the full year in 2017.

“To date, Ireland's impressive growth has been spurred on by relatively strong US and UK performances, a benign global backdrop, low interest rates, falling oil prices and favourable exchange rates,” said Ibec Senior Economist Gerard Brady. “But the world is becoming more unstable, politically and economically. We can no longer rely on these external factors. Making the right economic choices at home will play an increasing and pivotal role in how the economy performs in the coming months and years. Decisions that would add to business costs or reduce the ability of Irish companies to compete internationally must be avoided. Instead we need to make Ireland an even more attractive place in which to invest and do business.”

Ibec now expects employment growth of 2.9% this year and 2.4% in 2017, the result of strong domestic recovery and continued FDI growth. Eight of the economy’s 14 sectors have surpassed their 2007 employment peaks. Only the retail, industry and construction sectors have employment significantly below pre-crisis levels.

Employment in the third quarter rose by 2.9%, or 57,500 jobs, annually as the labour market continued to perform well ahead of other indicators. The growth continues to be mostly full-time with employment in full-time positions up by 44,800, 2.9%, over the course of the year. Importantly, strong growth in construction employment of 7.3% has helped reduce long-term unemployment to 92,000 from a peak of 204,000 in 2012. Employment grew in 12 of 14 sectors and all but six sectors of the economy have returned to their 2007 peaks in terms of employment.

“The impact of sterling’s collapse on indigenous exporters is a massive worry,” Brady said. “Output in food manufacturing, our largest indigenous export sector, fell by 2% annually in the first three quarters of the year and turnover was down by over 2.8%. The pace of the deterioration has accelerated since the Brexit result in June, with output down 5.6% in Q3. These figures point to turnover loss of almost €700 million in the food industry in 2016. This has major implications for rural areas. About 10% of turnover in the sector is spent on wages and salaries and 40% on intermediate purchases from the primary agri-sector.”