DUBLIN — Irish inflation is forecast to slow to 4.9% this year and the economy to grow by 2.1% due to its “remarkable resilience,” Ireland’s finance ministry said on Tuesday.
Inflation jumped to a near 40-year high of 9.2% last October but has since slowed to 7.7% and the finance ministry forecast that the headline rate would fall further to 2.5% next year.
But core inflation, which strips out unprocessed food and energy, is expected to average 4.4% this year and 3.2% in 2024.
Irish modified domestic demand, the government’s preferred measure of economic activity as it strips out many of the ways multinational activity can inflate growth, is set to expand by 2.5% next year, after the 2.1% forecast for 2023.
Modified domestic demand grew by 8.2% last year, making Ireland the fastest growing economy in the euro zone, but momentum fell sharply in the second half.
Ireland was also one of the few euro zone countries to record a budget surplus last year and the finance ministry expects that to grow to 3.5% of gross national income this year, 5.4% next year and as high as 6.3% in 2026.
Record corporate tax receipts, mostly paid by Ireland’s large hub of big multi-national companies, are mainly behind the huge projected surpluses.
The finance ministry said the public finances would still be in deficit this year without the “windfall” corporate receipts and that next year’s surplus would be 4.4 billion euros ($4.8 billion) and not the projected 16.2 billion euros without them. ($1 = 0.9133 euros) (Reporting by Padraic Halpin; Editing by Alexander Smith)
