Solid medium term growth still expected
Earlier today the government published its revised medium forecasts for the Irish economy and despite a modest GDP downgrade for 2024, the overall economic outlook remains a solid one. Below we’ve outlined our key messages together with these latest forecasts.
- Real GDP growth forecasts are downgraded somewhat, particularly for 2024 (from 4.5% to 2.9%). As in common with other forecasts from the ESRI and Central Bank, the downgrade has stemmed somewhat from weaker assumptions about export growth following a weaker tone to exports in the last 12 months.
- On the whole however, real GDP growth is still forecast to come in at 2-4% for 2024 and 2025 – an excellent result given the broader European economic picture.
- The domestic economy is expected to remain robust with consumer spending and modified domestic demand (a proxy for growth in the domestic economy) forecast to grow by 2.4% and 1.9% respectively in 2024
- Unemployment is forecast to rise gently to 4.6% this year and stay at around those levels in 2025. In reality a small pick-up in unemployment may not be a bad outcome given how tight the labour market is at present as it reduces the risk of excessive wage growth feeding into broader Irish inflation dynamics.
- All in all, the forecasts indicate a continued positive macro environment for the real estate market, boosted further by the growing likelihood the ECB will begin to lower interest rates in the second half of 2024
