Ireland's GDP is expected to keep increasing significantly, by 5.4% in 2022 and 4.4% in 2023, although slightly slower than previously expected due to higher inflation, supply bottlenecks and uncertainty created by the Russian aggression against Ukraine, which will negatively affect private consumption and investment. Net exports are projected to remain resilient and an important source of growth, according to the European Commission’s Spring 2022 Economic Forecast released today. Inflation is rising and expected to remain high for longer, albeit moderating in 2023. The fiscal outlook is set to further improve, with the budget balance set to reach a surplus of 0.4% of GDP in 2023.
The Spring 2022 Economic Forecast projects that, the real GDP growth in both the EU and the euro area is now expected at 2.7% in 2022 and 2.3% in 2023, down from 4.0% and 2.8% (2.7% in the euro area), respectively, in the Winter 2022 interim Forecast. The downgrade for 2022 must be read against the background of the growth momentum gathered by the economy in spring and summer last year, which adds around 2 percentage points to the annual growth rate for this year. Output growth within the year has been reduced from 2.1% to 0.8%.
The outlook for the EU economy before the outbreak of the war was for a prolonged and robust expansion. But Russia's invasion of Ukraine has posed new challenges, just as the Union had recovered from the economic impacts of the pandemic. By exerting further upward pressures on commodity prices, causing renewed supply disruptions and increasing uncertainty, the war is exacerbating pre-existing headwinds to growth, which were previously expected to subside. This has led the European Commission to revise the EU's growth outlook downwards, and the forecast for inflation upwards.
Full document: Spring 2022 Economic Forecast
- Publication date
- 16 May 2022
- Representation in Ireland