Quarterly Economic Outlook Q1 2023
The mood music in the economy is much lighter as we enter Spring. Signs across the global economy point to some easing of inflationary pressures, less volatility in wholesale energy prices and signs that global demand is proving resilient despite sharp increases in interest rates. All of this together, means we have upgraded our forecasts for both consumer spending and overall domestic demand in the Irish economy by 0.5 percentage points on our previous Economic Outlook. We now expect the domestic economy to grow by 3.6% in 2023 and in¬flation to fall to under 4% before the end of the year.
The year ahead still carries uncertainties as to how the global economy navigates the delicate balance between infl¬ation, growth and interest rates. However, our view is that there are now the ingredients in place for a quicker recovery in the global economy – particularly in the US. Europe is also facing significantly reduced exposure to fl¬uctuations in energy prices for 2023, due to higher-than-expected storage levels and reduced demand over winter. This, in turn, makes a prolonged recession in Europe unlikely. The Irish labour market will remain tight – with employment growing strongly, despite challenges for some sectors. Ireland’s major economic and social challenges within our control continue to be ones of capacity – in housing and broader public infrastructure.
Download the full Ibec Economic Outlook report below.