Bright Future for Ireland: Higher Incomes for Workers and Strong Economic Growth
Dublin: According to the Economic and Social Research Institute (ESRI), workers in Ireland can expect an increase in income this year and next, leading to substantial economic growth for the country.
ESRI forecasts that higher wages combined with lower inflation will boost workers’ disposable income. This improvement is expected to result in significant economic and GDP growth. The institute projects that worker savings will rise by four percent this year and by five percent in the next.
Declining Inflation
Inflation is anticipated to decline to 2.3% this year and further to 1.9% in 2025, according to ESRI’s Summer Quarterly Economic Commentary. Consequently, workers’ incomes are expected to increase by 2.2% this year and by 3.1% next year.
Economic Growth
These income gains are predicted to stimulate domestic consumption, reflecting positively across all major economic indicators, with growth rates of 2.6% this year and 3.1% next year.
ESRI predicts that the economy will grow by 2.2% this year in terms of Modified Domestic Demand (MDD), slightly below the previous forecast of 2.3% three months ago. However, MDD is expected to grow by 2.9% next year, surpassing earlier predictions. As the pandemic crisis recedes, exports are expected to increase by four percent.
GDP is also expected to benefit from this growth, with a projected increase of 2.5% this year and an even higher growth rate of 3.2% next year.
Labour Market and Investment Challenges
The report highlights that Ireland’s economy will thrive due to an innovative global outlook and robust domestic performance. The labour market is operating efficiently, with unemployment expected to be 4.1% this year and 4% next year.
However, ESRI cautions that the main challenge for the economy is to overcome investment limitations without triggering inflation. The report emphasises the need for a concerted effort to prevent these issues from hindering economic growth. It calls for increased investment in the domestic sector and careful attention to tax policy to manage investment costs. Fiscal discipline is essential to ensure that tax policies do not overstimulate the economy.
Global and Domestic Considerations
The report warns that the domestic economy must be prepared to deal with geopolitical shocks from Europe and Asia. Housing construction and supply need to accelerate, with a projection of completing 33,000 houses this year, matching last year’s figures.
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