Quarterly Economic Outlook Q3 2021
As we emerge from the pandemic the Irish economy is seeing a rapid recovery in domestic demand across almost every sector. The resilience of our business model has again shone through. Both locally and globally, however, this welcome bounce back from the pandemic has been tempered by significant cost increases in key inputs, energy prices and the cost of transport.
In addition, the Irish labour market is experiencing capacity pressures linked to our significant supply shortages in our housing market. Ireland as a small open regional economy and an island nation is more reliant on global supply chains in areas from energy and material inputs to transport and skills. As such our continued prosperity remains more vulnerable to competitiveness shocks than most.
As we have drawn attention to in the past – Ireland is also likely to suffer a greater competitiveness challenge from Brexit, from international tax reform and due to our laggard status in completing the low carbon transition. The key to weathering an exceptionally volatile external environment and reaping the long-term opportunities economic re-opening can bring is ensuring we protect our competitiveness. This can only be done by controlling costs where we can and prioritising strategic investments in innovation, digitalisation and skills.