Irish economy to grow steadily into 2024 – ESRI

The Irish economy is set to grow into next year as inflation is forecast to stabilise, according to the ESRI.

The think tank has predicted that Ireland’s domestic economic activity is to grow by 3.8% in 2023 and by 3.9% in 2024, leading to a surplus in both years.

In its latest quarterly economic report, the ESRI said it expects inflation “to moderate considerably” due to falling energy costs, dipping to an average of 4.5% in 2023 and down further to 3.5% next year.

It also warned that price levels are expected to remain high, which is likely to lead to higher interest rates remaining high for longer, suggesting that financial pressure will remain on low-income households.

Broader concerns with the global banking sector and any further escalation in tensions due to the Russian invasion of Ukraine could have a more negative impact on financial predictions, it added.

This comes as Ireland’s unemployment rate fell to a near historical low of 4.3% in February 2023, with the workforce anticipated to remain strong.

According to the ESRI, exports – which contributed significantly to overall growth in 2022 – are expected to continue to drive growth this year and next.

Strong exchequer receipts and corporate tax revenue are expected to lead to “a significant surplus” in government balance sheets in the next two years, but the ESRI highlighted the vulnerability of relying on the “increasing concentration” of corporation receipts from the pharma and ICT sector.

The author of the ESRI’s report Professor Kieran McQuinn said that while the international outlook is still uncertain, “the Irish economy is likely to grow somewhat stronger in 2023 than had previously been expected”.

Author of the ESRI report Dr Conor O’Toole said: “Despite a moderation in inflationary pressures in 2023 relative to 2022, high price levels are likely to present challenges for vulnerable households.

“Any ongoing cost-of-living measures should therefore be tailored and targeted to groups with the most need.”