Ireland flag Ireland: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Since the end of the EU-IMF bailout in late 2013, Ireland has enjoyed steady economic growth, and positioned itself as the fastest growing European economy. The national economy has been supported by strong domestic demand and by the activities of multinational companies operating in the country. However, due to the COVID-19 pandemic, GDP growth recently slowed down to reach 5.9% in 2020 (IMF). According to IMF estimates, the economy grew vigorously in 2021 (+13%) supported by the fiscal stimulus, a rebound in domestic activity and dynamic exports from multinational-dominated sectors. The IMF expects GDP growth to ease in 2022 (3.5%) and 2023 (3.9%).

Although the Irish economy suffered from the successive lockdowns put in place to contain the COVID-19, headline GDP figures remained positive due to the resilience of multinational corporations (The Economist Intelligence Unit). In 2021, supported by the largest fiscal package in Irish’s history (equivalent to 10% of the GDP), the economy recovered quickly. Consumption was stimulated by the gradual lifting of restrictions and increased household confidence following a successful vaccination rollout (OECD). As the no-deal Brexit was avoided, the outlook for investment improved (IMF). However, the recovery remained uneven, with output in many contact-intensive sectors such as hospitality still below pre-pandemic levels (OECD). At the end of 2021, as contamination cases and hospital admissions increased again, limitations were re-introduced. As a result of the support measures, Ireland's previously balanced budget was pushed into high deficit in 2021 (-3.3% GDP), and it should stay at the same level in 2022 before declining to -2.2% GDP in 2023 (IMF). More optimistic, the OECD forecasts the budget deficit to almost vanish by 2023. Public debt slightly increased since the crisis and is expected to reach 58.8% GDP in 2022, compared to 57.4% GDP in 2021. It is expected to decline to 58% GDP in 2023 (IMF). After an episode of deflation in 2020 (-0.5%), increased supply chain delays and strong domestic demand triggered inflationary pressures in 2021. Inflation rate amounted to 1.9% and is expected to remain at around the same level in 2022 (1.9%) and 2023 (2%) (IMF). Ireland is expected to get around 5% of GDP in EU grants and loans until 2023, to mitigate the economic and social impact of the Covid-19 crisis and facilitate the green and digital transitions. In 2022, in light with the markedly improved situation, emergency support will be phased out but the fiscal stance will remain supportive (OECD). The Budget 2022 aims at consolidating the recovery and supporting growth, job creation and entrepreneurship. Among the topics covered are support for the aviation industry, introduction of an international tax reform following the OECD agreement, as well as measures to respond to housing demand and tackle climate change (PwC). The main challenge in the short term is to contain the spread of a new variant of COVID-19, as infections rates were soaring at the end of 2021 despite 92% of the adult population being fully vaccinated. Moreover, the Irish economy remains very volatile due to the weight of multinationals in the economy. In the medium term, higher corporate tax rates and tensions around the implementation of the agreement between the European Union and the United Kingdom could deteriorate business climate (OECD).

According to data from the National Statistics Office (CSO), the unemployment rate fell to a historic low of 4.7% in December 2019, but it soared due to the effect of the COVID-19 pandemic. In November 2020, the COVID-19 Adjusted Measure of Unemployment (considering all claimants of the Pandemic Unemployment Payment (PUP) classified as unemployed) indicated a rate as high as 20.4% (CSO). This indicator fell to 6.9% in November 2021. IMF figures indicate an unemployment rate of 7.8% in 2021, and forecast a decrease to 7% in 2022 and 6% in 2023.

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 425.51504.52519.78549.09594.18
GDP (Constant Prices, Annual % Change) 6.213.69.04.04.0
GDP per Capita (USD) 85100102106114
General Government Balance (in % of GDP) -1.40.41.50.50.7
General Government Gross Debt (in % of GDP) 58.455.347.042.839.2
Inflation Rate (%) -0.52.48.46.53.0
Unemployment Rate (% of the Labour Force) 5.86.34.74.84.8
Current Account (billions USD) -29.1171.7963.5053.8656.44
Current Account (in % of GDP) -6.814.212.29.89.5

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Euro (EUR) - Average Annual Exchange Rate For 1 GHS 0.240.200.180.170.16

Source: World Bank, 2015

 

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Latest Update: November 2022