IMF revises Irish growth forecast despite slowing global economy

Ireland’s economy will grow 9 per cent this year and 4 per cent next year, the International Monetary Fund predicts, as it forecasts a major global slowdown and ‘technical’ recessions in almost half the world’s economies in 2023.

The IMF forecast for Ireland’s gross domestic product (GDP) – which includes volatile multinational transactions such as aircraft leasing and patent movements – has been revised up by more than a point this year, but by about a point in 2023 compared to its July forecast lowered.

Irish prices are likely to rise to 8.4 percent on average this year before falling to 6.5 percent next year, the IMF said, while unemployment will hover near record lows of below 5 percent.

The central bank said last week that Ireland’s domestic economy could “potentially” experience two consecutive quarters of negative growth – the definition of a technical recession – next year as the country experiences a “significant slowdown” from late 2022.

In its global economic outlook on Tuesday, the IMF forecast global growth of 3.2 percent this year and 2.7 percent in 2023, compared with 6 percent in 2021, the weakest forecast since the peak of the pandemic.

Global inflation is projected to rise to 8.8 percent in 2022 and fall to 6.5 percent in 2023.

In a downside scenario – including a steeper oil price hike, a collapse in China’s real estate market, a bursting job bubble and faster rate hikes – global growth could fall below 2 percent and inflation rise by as much as 1.5 points.

Eurozone GDP growth is forecast to be almost flat next year at 0.5 percent – with Italy (-0.2 percent) and Germany (-0.3 percent) entering recession after growth of 3 .1 percent in 2022. German and Italian growth figures for 2023 have each been revised down by almost a point since the fund’s last forecast in July.

The US is expected to grow 1.6 percent in 2022 and 1 percent in 2023, after growing 5.7 percent last year. Growth in the UK is forecast at 3.6 percent in 2022 and 0.3 percent in 2023.

China’s economy is expected to expand 3.2 percent this year and 4.4 percent next year. Russia’s economy is expected to shrink by 3.4 percent in 2022 and 2.3 percent in 2023 — the only other economy besides Italy and Germany that is forecast to post negative growth on average over the next year .

The IMF has warned governments not to overspend to stem the slowdown and warned it “could be at odds” with central banks’ attempts to tame inflation.

“As storm clouds gather, policymakers must keep a steady hand,” said IMF economic adviser Pierre-Olivier Gourinchas.

“To do otherwise will only prolong the fight to bring inflation down, risk unanchoring inflation expectations, raising financing costs and fueling further financial instability.

“The risk of oversized, ill-targeted and broad-based fiscal packages in many countries is not negligible.” IMF revises Irish growth forecast despite slowing global economy

Fry Electronics Team

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