Irish domestic economic growth still strong – ESRI

By Gráinne Ní Aodha, PA

Domestic growth in the Irish economy is „very strong”, according to the Institute for Economic and Social Research think tank.

ESRI’s latest Quarterly Economic Commentary predicts continued economic growth in 2023 and 2024, and inflation will moderate „significantly” as price pressures begin to ease, particularly in the energy market.

Modified Domestic Demand (MDD), a measure of Ireland’s domestic economic activity, is forecast to grow by 3.6 per cent this year and 4 per cent in 2024.

The unemployment rate fell to 3.8 percent as of May, and is expected to average below 4 percent this year and next.

With taxation receipts in the first five months of the year already 10 percent higher than their levels in 2022, continued growth in public finances is also expected.

Despite this strong scenario, there will be a „slowdown in multinational activity” due to higher interest rates, affecting global activity and investment decisions.

Higher rates are expected to contribute to some moderation in investment activity and cool demand for housing and mortgages.

Reduced global demand is expected to affect exports, which will grow at a slower pace, largely due to a decline in pharmaceutical-related goods.

„Any further contraction in the pharma or ICT sectors could lead to downward revisions in export growth and reduce the growth outlook,” ESRI said.

Editor Kieran McQueen said: „The Irish economy is set to experience steady growth in 2023 and 2024, however, global uncertainty will put negative pressures on the domestic trade sector.”

Editor Conor O’Toole said: „The domestic economy continues to grow strongly and the labor market is particularly buoyant.

„This could lead to challenges in sectors such as construction and risks putting upward pressure on general prices and wages.”