Ireland’s central bank raised its growth forecast for 2021 for the second time. This is as the progress of the COVID-19 vaccination campaign, improving consumer sentiment and international tailwinds set the scene for a strong recovery.
The Central Bank had revised its forecast for GDP growth for this year to 8.3% in its latest quarterly report. This move comes after the annual GDP growth swelled in the first quarter to 11.8% by the exports of large technology and pharmaceutical firms. Director of Economics and Statistics Mark Cassidy said that the bank is seeing a widespread improvement of consumer and business sentiment as Covid-19 restrictions are relaxed and vaccines are rolled out. Modified Domestic Demand measured the domestic economy, and that is expected to grow by 3.4% in 2021. Supply shortages and bottlenecks likely leads to higher prices and the Central Bank is forecasting CPI inflation averaging 1.7% this year.
Cassidy said that however the price pressures were expected to be transitory. Ireland’s unemployment rate is expected to fall from 18.3% in June 2021 to below 11% in early 2022. The Central Bank also stated that the employment levels are not expected to reach pre-pandemic levels until the second half of 2023.
