Minister McGrath notes publication of European Commission spring forecasts
- Foilsithe: 15 Bealtaine 2023
- An t-eolas is déanaí: 12 Aibreán 2025
- the European Commission published its spring forecasts for the European Union, euro area and selected European economies for 2023 and 2024
- the Commission projects Irish GDP growth of 5½ per cent and 5 per cent for 2023 and 2024, representing upward revisions since the Commission’s winter forecasts
- Modified Domestic Demand - a better measure of domestic economic activity - is projected to grow by 2 per cent and 2.3 per cent in 2023 and 2024, broadly in line with forecasts published by the Department of Finance in the Stability Programme Update in April
- the Commission projects an inflation rate of 4.6 per cent for 2023 before easing to 2.6 per cent in 2024
- however, core inflation, which excludes energy prices, is projected to remain elevated at 5.3 per cent for this year and 4.1 per cent for 2024
- the euro area is projected to grow by 1.1 per cent this year and by 1.6 per cent in 2024, upward revisions since winter forecasts
The European Commission today (15 May) published its spring forecasts for Ireland, the euro area, European Union and other European countries.
The Minister for Finance Michael McGrath commented:
“The Commission is anticipating a more positive economic outlook than in its winter forecast, with lower energy prices, improved business confidence and a strong labour market helping to boost economic activity across the continent. Euro area GDP is projected to increase by 1.1 per cent this year, an upward revision of 0.2 percentage points from the Commission’s winter forecasts.
"I also note the Commission’s projections for the Irish economy. The Commission forecasts GDP growth of 5½ per cent for this year, an upward revision of 0.6 percentage points since the winter forecasts. Modified Domestic Demand (MDD) – which better reflects domestic economic activity – is projected to grow by 2 per cent this year and 2.3 per cent next year, broadly in line with my department’s spring forecasts published in the Stability Programme Update (SPU) last month. The Commission projects an easing in headline inflation to 4.6 per cent this year and 2.6 per cent next year, though with core inflation remaining elevated, in line with my department’s expectations. According to the Commission, the comparatively strong rate of growth in the Irish economy reflects the continued dynamism, a labour market at full employment and related strength in private consumption.
"The Commission forecasts another large budget surplus for this year and next, while noting the potential volatility of future corporation tax receipts. Indeed, that is why I am developing proposals for a long-term savings fund that will be capitalised with some portion of windfall receipts and future budgetary surpluses. The options for such a fund are explored in a paper released by my department last week.
"Looking ahead, I continue to be optimistic about the Irish economy, which has shown remarkable resilience in the face of a weak global economy. Ireland is now at close to full employment with an unemployment rate of 3.9 per cent recorded in April, the lowest rate in over two decades. As inflationary pressures continue to ease, real household disposable income is set to recover and will support consumer spending growth, while the fading of the energy price shock should also support higher levels of investment by firms."
Notes
Future-proofing the Public Finances – the Next Steps, available here: Future-proofing the Public Finances – the Next Steps
Table 1: main economic indicators – Stability Programme Update 2023
| 2022 | 2023 | 2024 | 2025 | 2026 | |
| per | cent | change | |||
| Modified domestic demand | 8.2 | 2.1 | 2.5 | 3.2 | 3.4 |
| Personal consumption | 6.6 | 3.9 | 3.8 | 3.4 | 3.4 |
| Inflation (HICP) | 8.1 | 4.9 | 2.5 | 2.0 | 2.0 |
| Employment | 6.6 | 1.6 | 1.4 | 1.5 | 1.6 |
| Unemployment rate (per cent) | 4.5 | 4.4 | 4.5 | 4.5 | 4.5 |
Source: CSO for 2022 and Department of Finance 2023-2026.