The Central Bank has reduced its forecast for economic growth for this year due to rising uncertainty caused by the trade war between the US and EU. It says the domestic economy will grow by 2.7% which is 0.5% lower than its last projection.

The bank said the economy is continuing to perform well, but it added: “Risks to the growth outlook remain firmly on the downside as the risk of more pronounced global tensions have risen.”

“As a small open economy with extensive trade and foreign direct investment linkages with the US, the Irish economy, public finances and labour market are highly exposed to changes in US economic policy and any broader deterioration in the global trading environment,” it said. The bank has also increased its forecast for inflation for this year by 0.5% to 2.2% due to higher energy prices and more persistent services inflation.