Irish domestic economy nearing pre-pandemic level

By this year end, the Irish domestic economic activity will reach its pre-coronavirus pandemic level. A stronger than expected surge in consumption will add to inflationary pressure, as per the country’s central bank. The local price pressures are expected to ease towards the latter half of next year, according to the Irish authority. This echoes the European Central Bank‘s view.

Ireland’s central bank expects modified domestic demand. Gross domestic product (GDP) is set to jump by 15.3%. This is in line with government forecasts. The central bank said that this will again be distorted by the activities of multinationals. GDP is likely to overstate the underlying rate of growth in the Irish economy. It stated that recommending that further datapoints be developed so Ireland’s national accounts can be better used for analysis. Ireland’s budget deficit will fall to 7.5% of modified gross national income (GNI*).

The deficit will improve considerably to 4.2% of GNI* next year according to the central bank. It also increased its forecast for inflation next year to 2.9%. Total inflation is forecast to fall back to 1.9% in 2023. The bank said that persistent increases will eventually have a wider impact and could contribute to more longer lasting inflationary pressures in the economy. Director of Economics Mark Cassidy told a news conference that they will be looking at whether the developments in the hot sectors spill over to the other sectors of the economy.