Ireland is set to avoid recession in 2023, according to the latest EU forecast, which expects most of the bloc to tip into negative growth from this winter.
However, the European Commission forecasts that economic activity here will slow by more than half next year – with domestic activity and job growth falling even more.
The European Commission has revised up its forecast for Ireland’s gross domestic product (GDP) this year to 7.9 per cent – more than two points above previous estimates – but next year’s forecast by just over a point to 3, 3 percent lower.
Modified domestic demand – which excludes multinational patents and aircraft leasing – will fall to 2% next year from 8.6% in 2022, a much more pessimistic forecast than the Central Bank of Ireland. An increase to 3.4 percent is forecast by 2024.
Irish inflation is expected to average 8.3 per cent this year, slowing to 6 per cent next year and 2.8 per cent in 2024, similar to recent central bank forecasts. The numbers are below the average for the eurozone and the EU.
Irish unemployment is set to rise slightly to 4.8% next year from 4.4% this year but remains one of the lowest in the EU. The average values for the EU and the euro area are between 6 and 7 percent.
However, employment growth in Ireland will slow sharply from 3.1 per cent this year to 0.8 per cent in 2023, the EU forecasts, and to 0.6 per cent in 2023. It is expected to pick up again next year entire block remains unchanged.
Ireland’s public finances are among the healthiest in the EU. Cyprus – a former aid country – is the only other EU member expected to run a budget surplus over the next two years.
Gross debt, measured as a percentage of GDP, is expected to fall below 40 percent in 2024, making Ireland one of the lowest-debt countries in the bloc, along with Sweden, Denmark, Luxembourg, Bulgaria and Lithuania.
The Irish government no longer uses GDP as a measure of debt due to the impact of multinational corporations on tax revenues.
The retreat in Ireland reflects an economic slowdown in the rest of the eurozone and across the EU, with the German, Swedish and Latvian economies set to contract in 2023, while Estonia is set to post a small contraction this year.
“We are approaching the end of a year in which Russia once again cast the dark shadow of war over our continent,” said EU Economic Commissioner Paolo Gentiloni.
“Rising energy prices and rampant inflation are now taking their toll and we are facing a very challenging time, both socially and economically.”
Growth is expected to return to Europe next spring as inflation eases its grip on the economy.
That said, growth is unlikely to top zero next year – at 0.3 percent in the eurozone and broader EU – before accelerating to 1.6 percent in the EU and 1.5 percent in the eurozone in 2024 .
Strong growth across the bloc in the first half of this year has raised forecasts for 2022, with the Commission now forecasting eurozone GDP to grow by 3.2 percent (3.3 percent in the EU) this year, half a point more than in their summer statement.
Eurozone inflation is expected to peak later this year, averaging 8.5 percent in 2022.
Price increases in the zone, which now has 20 members (Croatia will officially join from January) are expected to ease to 6.1 percent in 2023 and fall to 2.6 percent the following year – still well above the 2 percent target European Central Bank.
Inflation across the EU will be 9.3 percent this year, 7 percent in 2023 and 3 percent in 2024, the commission said, with price increases in Slovakia, Poland, Romania and Estonia remaining in double digits next year.
https://www.independent.ie/business/irish/irish-economy-to-slow-sharply-next-year-but-escape-recession-eu-forecast-42136377.html Irish economy to slow sharply next year but avoid recession – EU forecast