Roundup of LATEST Economic Forecasts:
The ESRI and the EU have updated their economic forecasts in the last few months. There have also been changes to the Department finance estimates for GDP.
The gist of the revisions is that 2022 turned out to be much better than forecasted a year ago with some last minute upward revisions in the last few months. In terms of GDP, the EU and the Central Bank put growth of GDP at 12.2% last year.
A large chunk of this represents the international high tech sector which does not easily translate into employment and incomes of the general population. (It does, however, contribute to the fiscal situation through higher corporate tax receipts).
But even looking at Modified Domestic Demand (MDD) which more closely parallels personal incomes, it can be seen that last year was a bumper year with MDD up 6.4% to 8.4% depending on whose forecast one chooses.
A much more subdued picture is presented for 2023 with MDD forecast to rise by only 1.2% to 2.3% (though most EU countries would regard those prospects as quite positive.). The Central Bank and the Department of Finance, presumably singing from the same hymn sheet foresee a slight acceleration in growth in 2024. The Department ventures a prediction of 3.6% growth in MDD in 2025.
Unfortunately, the picture for inflation is significantly negative. It jumped from 2.4% in 2021 to 8% last year and is expected to remain quite strong in the current year before dropping back to around 2% in 2024 which is closer to its pre Covid average. It is also close to the inflation targets of the ECB and other central banks. But with a war raging in Europe and the Chinese economy emerging from Covid restrictions, there are a lot of unknowns in the inflation forecasts.