The Government has revised its forecast for economic growth down slightly, predominantly as a result of external risks. 

According to the Department of Finance, GDP will increase by 3.9% this year, down from the 4.2% estimate in Budget 2019. 

Next year the department estimates GDP will grow by 3.3% compared to the 3.6% projected in the budget. 

The revisions reflect a deterioration in the main markets that Irish firms export to, particularly the UK due in large part to Brexit uncertainty and the euro area where the economic cycle has peaked sooner-than-expected.

It also points to a softening in US growth in the short-term as the impact of fiscal stimulus there fades.

Some domestic indicators have also moderated in recent months, it says. 

The figures are based upon the UK making an orderly exit from the EU, not a hard or disruptive Brexit, although it also recognises that this eventuality can't be ruled out.

Unemployment will average 5.4% this year, according to the forecast, as the labour market and employment continues to grow strongly.  

The number of people without work will continue to fall, it projects, reaching 5% by 2023. 

The data is contained in the Stability Programme Update (SPU) 2019, presented to the Cabinet this morning by the Minister for Finance Paschal Donohoe. 

The SPU sets out updated macroeconomic and fiscal forecasts for the period 2019-2023. 

Its findings form the backdrop of policies that will be outlined in the next Summer Economic Statement. 

According to the analysis, which is to be submitted to the European Commission by the end of April, employment will continue to grow past its pre-crisis peak, specifically by 2.2% this year and 2.1% next year.

The Department says a general government surplus of 0.2% of GDP is forecast for this year, following the exchequer's move back into the black last year, an improvement on the budget day prediction. 

This, it says, is the result of stronger than previously assumed revenue from corporation tax at the tail end of last year, which should carry over into this year.

Minister Donohoe welcomed the statement, but cautioned against taking anything for granted. 

"We cannot be complacent, however, as there are serious risks on the horizon, not least of which is the nature and timing of the UK's exit from the European Union," he said.

"It is absolutely vital that we continue to build up our fiscal defences, so that we can continue to support the economy, and provide for society, if, and when, these risks materialise," the Minister added.

Minister Donohoe also said that climate is a key economic risk.

He pointed to the fact that Ireland has binding emissions and renewable energy targets for 2020 and there will be penalties for missing those. 

He said from an economic point of view it is very important to intensify the debate on carbon tax adding: "I believe a shift in carbon taxation… can influence the investment and purchase decisions that our economy can make and my department will be implementing a very short consultation process to look at how tax changes like that can be made while dealing with the kinds of challenges people may have in terms of living standards and businesses may have as we make this change."

The document predicts that the debt-to-GDP ratio will reach 61% of GDP this year.

But it reiterates that this paints an overly benign picture of public indebtedness here, with other measures offering a more concerning picture.

This highlights the importance of the Government’s strategy of implementing prudent budgetary policies designed to further reduce the elevated burden of public debt, the update states.