Quarterly Economic Commentary, Summer 2023

Forecast overview:

• The general assessment of the Irish economy can be characterised as follows: Economic headwinds such as rising interest rates, slower than expected global trade and persistent inflation are clouding the international outlook but the domestic economy is growing robustly. However, the emergence of capacity constraints, particularly in the labour and housing markets may have implications for future growth.
• We now believe the economy as measured by modified domestic demand (MDD) will increase by 3.5 per cent this year and 4.0 per cent in 2024. The greater pace of economic activity next year is mainly attributable to the expected lower rate of inflation.
• The Irish labour market continues to perform in a robust manner. The recent decline in the unemployment rate below 4 per cent is a notable occurrence. This is a historically low rate.
• This continued robust economic performance comes against the backdrop of persistent global uncertainties such as inflationary pressures, rising interest rates and ongoing geopolitical risks.