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Ireland After two years of double-digit growth, GDP is set to decelerate, with growth projected at 4.4% in 2023 and 3.7% in 2024, as support from exports in multinational-dominated sectors gradually eases. Despite persistent inflation, consumer spending will be relatively strong in 2023, underpinned by significant employment growth and the summer tourist season. Confidence improvements will gradually strengthen business orders and enhance firms’ incentives to invest. Modified domestic demand, which removes some distortions due to the high share of multinational firms, will grow by 1.8% in 2023, and 3.0% in 2024. On the back of continued strength in tax receipts, the government has announced cost-of-living measures worth a total of 2.4% of GDP (4.4% of GNI*, i.e., gross national income excluding globalisation effects) since early-2022, with support becoming increasingly targeted. To improve the long-term sustainability of public finances and increase resilience to shocks, the allocation of windfall tax revenues to the National Reserve Fund should be continued, and adherence to the 5% spending rule should be rapidly restored. Productivity-enhancing structural reforms will be needed to cope with rapid population ageing and other long-term fiscal challenges. Weak investment is weighing on the domestic economy Supported by post-pandemic pent-up consumer demand and the strength of multinational-dominated sectors, GDP grew by over 12% in 2022. Household consumption remained resilient in the first quarter of 2023, supported by significant wage and employment growth and still large pandemic-related excess savings. However, a weaker global outlook, rising energy and input prices, and higher borrowing costs lowered firms’ investment incentives, especially in the manufacturing sector. Combined with low exports, this led to a contraction in GDP in the first quarter of 2023.
Ireland
1. Excludes large transactions of foreign corporations that do not have a big impact on the domestic economy. 2. Calculations based on a common set of 213 unweighted sub-indices. Source: OECD Economic Outlook 113 database; and Eurostat. StatLink 2 https://stat.link/hx8pe9
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 1: PRELIMINARY VERSION © OECD 2023