Regulator says capacity constraints in employment and housing point to moderate growth outlook
“The result of this is slower growth in MDD over the forecast horizon in this bulletin, and marginally more upside risk to the inflation outlook,” it said, noting the Government’s budgetary package – expected to be in the region of €11 billion – could end up keeping inflation higher for longer.
While the outlook for global growth has modestly improved in recent months, it remains weak by historical standards, the Central Bank said, noting Irish export growth has been muted in the first half of 2023, in both exports out of the State and contract-manufacturing exports undertaken abroad on behalf of Irish resident multinational enterprises .
It highlighted a slowdown in cross-border pharma exports from Ireland, suggesting it “likely reflects a reversion to more normal levels of activity, which had been boosted by pandemic-related production, in particular for vaccines”. Regarding the information and communications technology in the State, it warned there may be more fundamental cyclical and structural issues at play, with “the higher interest rate environment, lower growth prospects in China and potential trade fragmentation weighing on growth”.
“Going forward, there remains significant uncertainty around the precise path for export growth, the contribution of net exports and foreign-owned MNEs to GDP growth, and how that will influence corporation tax receipts in the years ahead,” it warned.
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