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Irish Economy to Slow in 2024, 2025 Rebound Predicted
- Ireland’s GDP is expected to decline by 0.5% in 2024, mainly due to a contraction in the multinational sector in the first half of the year, according to the European Commission’s Autumn 2024 Economic Forecast.
- Source: RTÉ Ireland
Bank of Ireland Revises Economic Outlook for Ireland Upwards
- The Bank of ireland has revised its economic forecasts for Ireland upwards, with GDP now expected to be 4.3%, Modified Domestic Demand at 4%, and Employment at 2.2%.
- Source: Bank of Ireland
Irish Economic Digest: Q1 2025
- Modified domestic demand (MDD) is forecast to have grown by around 2.5% to 3.2% in 2024, despite the relatively poor GDP performance. MDD growth of 3% to 4% is forecast for 2025, with long-term forecasts indicating growth close to 3% per annum to the end of the decade.
- Source: PwC Ireland
Government Briefing Note on Economic outlook
- The document points to easing cost-of-living pressures and inflation, which have helped boost real incomes and supported solid growth in consumption. Consumer spending is expected to be the primary driver of growth in the domestic economy.
- The briefing note also highlights that while the public finances are in a reasonably good position, public expenditure has increased by more than 50% since just before the pandemic, and there is no case for a continuation of worldwide once-off payments.
- Source: Government Briefing Note
Table of Contents
Recent economic forecasts paint a mixed picture of Ireland’s economic trajectory. With predictions of slowed GDP growth in 2024 juxtaposed against optimistic outlooks for modified domestic demand and employment, understanding the drivers and potential challenges within the Irish economy is crucial. We spoke with Dr. Aoife O’Reilly, an economic analyst specializing in Irish macroeconomics, to delve deeper into thes forecasts and their implications.
GP Growth: A Near-Term Dip or a Long-Term Trend?
Senior Editor: The European Commission predicts a 0.5% decline in Ireland’s GDP in 2024. Can you elaborate on the factors contributing to this anticipated slowdown?
Dr. O’Reilly: The anticipated contraction is primarily attributed to a predicted downturn in the multinational sector in the first half of 2024. This segment, historically a important contributor to Ireland’s GDP growth, is anticipated to experience some consolidation and adjustments. Its crucial to remember that this is a temporary blip, not a sign of a long-term structural issue.
A Shining Outlook for Modified Domestic Demand
Senior Editor: In contrast to the GDP prediction, reports suggest a robust picture for Modified Domestic Demand (MDD).PwC’s Irish Economic Digest projects MDD growth between 3% and 4% in 2025. What gives confidence in this area?
Dr.O’Reilly: The positive outlook for MDD is driven by several factors. Firstly, easing cost-of-living pressures and controlled inflation are bolstering real incomes. This translates to increased consumer confidence and spending, as highlighted in the recent Government Briefing Note.
“Consumer spending is expected to be the primary driver of growth in the domestic economy,” reads the brief. This focus on consumer power is key.
employment: A Steadfast Performer
Senior Editor: The Bank of Ireland projects a 2.2% growth in employment. What are the key industries driving this positive trend?
Dr. O’reilly: While the multinational sector might experience a temporary slowdown, other sectors are performing exceptionally well. Ireland’s technology, healthcare, and tourism industries are all contributing significantly to job creation. Additionally, the Government’s focus on skills development and investment in infrastructure is laying a strong foundation for future employment growth.
Balancing Fiscal Prudence with economic Stimulus
Senior Editor: The Government Briefing Note expresses concern over the rapid increase in public expenditure as the pandemic. What are the implications for future economic policies?
Dr. O’Reilly: The government faces a delicate balancing act. While it’s essential to maintain public investment to support growth, it’s equally important to ensure fiscal sustainability. This might involve prioritizing strategic investments, streamlining non-essential spending, and exploring innovative funding models to avoid excessive debt accumulation.
Ireland’s economic landscape presents a tapestry of strengths and challenges. Although GDP growth is predicted to moderate in 2024, other indicators, particularly Modified Domestic Demand, project a robust and resilient economy. The focus on strengthening domestic demand through consumer confidence, diversifying the economy beyond the multinational sector, and managing public finances responsibly will be crucial for Ireland to navigate these economic crossroads successfully.