It said Brexit was negative for the Irish economy.
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GDP is now projected to grow by 4.9% this year and by 3.6% in 2017.
In terms of Brexit the report states “Assessing the outlook for the economy is further complicated by the outcome of the Brexit referendum in the UK”.
“The close relationship between the Irish and United Kingdom economies creates a particular exposure for the Irish economy from Brexit”, the bank said in a quarterly bulletin – its first since a momentous June 23 referendum in which Britain opted for Brexit.
Brexit will inflict serious damage on the country and will prove a “negative and material” blow to Ireland’s economy, Central Bank forecast yesterday.
The growth forecast for this year was reduced to 3.6 percent from 4.2 percent, the Central Bank of Ireland said in its latest quarterly bulletin, released Wednesday. “The majority (circa 85%) of these restructured accounts are meeting the terms of their new arrangement”. It said employment will grow by 67,000 this year and in 2017.
“However, risks to the projections are clearly weighted to the downside, reflecting the possibility of a more adverse impact on the United Kingdom economy, a larger spill-over to the broader global economy or the potential for more negative domestic confidence and labour market effects than incorporated in the forecasts”. The bank says there is a need to develop a more meaningful, commonly-agreed measure of Irish economic activity.
The bulletin also warned that the recent growth figures highlighted the fragility of some sources of tax revenue, such as corporation tax, which grew by 50 per cent previous year.
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The central bank warned that while the GDP figures “seriously misrepresent” economic growth, they also make standard gauges of budgetary health that are used by the European Union “much less meaningful”.
