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Irish Economy Estimated to Surge in a Couple of Years: ESRI

The Economic and Social Research Institute (ESRI) has projected a robust growth trajectory for Ireland’s domestic economy in the upcoming two years. This forecast comes alongside predictions of declining inflation and burgeoning wages. Modified domestic demand (MDD), a metric utilized by the ESRI to gauge economic growth by excluding the influence of multinational corporations, is anticipated to expand by 2.3% this year and 2.5% in the subsequent year.

Last year, MDD witnessed a mere 0.5% growth, attributable to the impact of inflation and elevated interest rates on expenditure and investment. Although Ireland initially rebounded strongly from the pandemic, economic momentum decelerated notably in 2023. Escalating inflation posed challenges for households, resulting in stagnant real wage growth throughout 2022 and 2023. Real pay, adjusted for inflation, serves as a barometer for fluctuations in living standards; hence, the ESRI anticipates a positive trajectory for real pay this year, a sentiment echoed by Ireland’s Central Bank.

Traditionally, Gross Domestic Product (GDP) serves as the primary indicator of economic performance, yet its accuracy is compromised in Ireland due to the disproportionate influence of multinational corporations. Official figures indicated a 3.2% contraction in Irish GDP in 2023, reflecting the diminished activity of US pharmaceutical companies post-pandemic peaks. However, the ESRI projects a resurgence in Irish GDP over the next two years, buoyed by global trade recovery.

Amidst these projections, the ESRI underscores the pressing need to address Ireland’s infrastructure deficiencies, particularly in housebuilding. Challenges extend to sectors such as renewable energy and public transportation, exemplified by the prolonged planning process for an underground rail link between Dublin Airport and the city center—a project first proposed over two decades ago.