The Economic and Social Research Institute (ESRI) predicts that the Irish economy will grow by 11 percent. This is the highest rate of growth ever announced by the Institute. This is also more than double what the Irish Government forecasts.
According to ESRI, the growth will be due to stronger exports, particularly from the multinational sector, and a rebound in consumption and investment linked to the easing of the pandemic restrictions.
Consumer spending is expected to grow by 7.5 percent in 2021. As the expected growth for 2021 is 11 percent, for 2022 the expectation is 6.9 percent.
However, ESRI also warns that its forecasts are based on the permanent relaxation of health measures. ESRI notes that their expectation on growth numbers will change if restrictions return.
According to the ESRI’s calculations, the cost of the pandemic in 2020 and 2021 in total will be around €24 billion. However, the Irish economy is expected to return to its pre-pandemic levels by 2022. This is earlier than previous expectations.
18,000 Housing Units Are To Be Built
The estimated unemployment rate for 2021 is nine percent. For 2022, it’s seven percent.
The ESRI also notes that residential construction has been deeply affected by the restrictions. This can be seen as the imbalance between housing supply and demand is greater now than the pre-pandemic level. The Institute’s expectation is that 18,000 housing units are going to be built in 2021.
The ESRI reports that as there is a decline in supply, the gap with structural demand might get worsened in the short run.
This is why the Government is expected to double the existing level of capital investment on housing to €4 billion. This investment can be financed by running “on an ongoing basis” an annual budget deficit of between €4 billion and €7 billion. This is equal to 1.5 percent of gross domestic product.
The Strongest Level of Growth in Europe
Meanwhile, the IMF forecasts a growth of 4.6 percent for Ireland in GDP terms. This will be five percent in 2022. The increase is mainly expected thanks to the foreign IT and pharma exporting companies.
The unemployment is expected to be around seven percent in 2021 and fall to five in 2022.
Ireland witnessed a growth of 7.8 percent in the first quarter of 2021. This is the strongest level of growth in the whole of Europe.
