Subject: Summer 2022 Economic Forecast: Russia’s war worsens the outlook

Despite the very strong first quarter Irish economy growth, the European Commission has revised its expectation for Ireland's real GDP growth for 2022 slightly down to 5.3% (from 5.4% in its Spring Forecast in May 2022), while the 2023 annual growth projection is revised down to 4.0% (from 4.4% in May), reflecting the deteriorating global outlook, weakening sentiment, and persisting inflationary pressures, according to the European Commission’s Summer 2022 (interim) Economic Forecast released today. The outlook for the Irish economy is surrounded by high uncertainty also due to factors which are specific to Ireland, such as recent developments regarding the disapplication by the UK of the Protocol on Ireland / Northern Ireland under the EU-UK Withdrawal Agreement. Inflation in Ireland is now projected to rise to 7.3% in 2022 before declining to 3.3% in 2023, when energy prices are expected to contribute negatively.

The Summer 2022 Economic Forecast projects that the EU economy will grow by 2.7% in 2022 and 1.5% in 2023. Growth in the euro area is expected at 2.6% in 2022, moderating to 1.4% in 2023. Annual average inflation is projected to peak at historical highs in 2022, at 7.6% in the euro area and 8.3% in the EU, before easing in 2023 to 4.0% and 4.6%, respectively. Russia’s war of aggression against Ukraine continues to negatively affect the EU economy, setting it on a path of lower growth and higher inflation compared to the Spring Forecast. 

Paolo Gentiloni, Commissioner for Economy said:

“Russia's unprovoked invasion of Ukraine continues to send shockwaves through the global economy. Moscow's actions are disrupting energy and grain supplies, pushing up prices and weakening confidence. In Europe, momentum from the reopening of our economies is set to prop up annual growth in 2022, but for 2023 we have markedly revised down our forecast. Record-high inflation is now expected to peak later this year and gradually decline in 2023. With the course of the war and the reliability of gas supplies unknown, this forecast is subject to high uncertainty and downside risks. To navigate these troubled waters, Europe must show leadership, with three words defining our policies: solidarity, sustainability and security.”

More Information:

Full press release

Full document: Summer 2022 (interim) Economic Forecast

Forecast for Ireland