Economy in 2022: Ireland’s two tiers have come into sharp focus via IrishTimesBiz
A tale of two economies: The State's multinational sector is strong but the domestic economy is suffering under the cost-of-living crisis. Photograph: Tom HonanIt all started so well. By early this year, it was clear that the economy had survived Covid-19 in better shape than anticipated and it was already into a rebound from the pandemic shutdowns, even though the final restrictions were not lifted until the end of February.
The exchequer is awash with cash. And political pressure will come to spend more to address the key problem areas – health and housing “Any analyst would say it was a good year if the economy added 80,000 mostly high-paid jobs, saw the income tax take rise by 16 per cent, have bank deposits per household nearing €70,000 and a domestic economy which recovered almost immediately back to activity well north of its pre-pandemic levels,” he says.
Gradually during 2022 things changed, driven in large part by the cost-of-living crisis. It looks likely to be a year of transition for the economy; no longer do we have all the winds in our favour. Now things are more mixed and the international geopolitical environment remains unsettled. The tech sector is under pressure, with then tánaiste Leo Varadkar saying that thousands rather than hundreds of jobs are likely to be lost.
The consumer economy has been in and out and out of “recessions”, first because of Covid and now due to the cost-of-living crisis GDP – as defined by two successive quarters of falling activity. Hughes calculates that higher prices have cost Irish households a chunky €3,000 this year and could cost another €2,000 next year. But still, the overall economic figures are strong, illustrating, says Hughes, the radically different forces affecting the different parts of the economy.
The exchequer is awash with cash. And political pressure will come to spend more to address the key problem areas – health and housing. The Government has been successful in piloting the economy over the past couple of years, but progress in these two areas remains slow despite a huge ramp-up in spending. House completion looks set to rise to 28,000 this year – after the unfortunate fall-off during Covid.