The analysis points out that on the back of the strong first quarter reading, Ireland’s real GDP growth projection has been revised up to 7.2% in 2021. Progress in vaccination in the second quarter resulted in a gradual relaxation of the restrictions in contact-intensive sectors, paving the way for an expected pick-up in domestic demand. Early indicators, such as retail sales, industrial production and construction volumes, jumped in April. Most confidence indicators also improved in May, with particular optimism in services, both concerning the current situation and demand expectations. Domestic sectors are expected to perform even better in the second half of the year. More moderate, though still strong GDP growth of 5.1% is expected in 2022, on the back of the partial unwinding of the very large household savings accumulated during the long and very strict lockdowns and the continuously improving external environment.
The Summer 2021 Economic Forecast projects that the economy in the EU and the euro area is set to expand by 4.8% this year and 4.5% in 2022. Compared to the previous forecast in the spring, the growth rate for 2021 is significantly higher in the EU (+0.6 pps.) and the euro area (+0.5 pps.), while for 2022 it is slightly higher in both areas (+0.1 pp.). Real GDP is projected to return to its pre‑crisis level in the last quarter of 2021 in both the EU and the euro area. For the euro area, this is one quarter earlier than expected in the Spring Forecast.
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