The lagged effects of higher interest rates have triggered a slowdown but so far employment and wages are holding up
The latest euro zone growth numbers pointed to a contraction of 0.1 per cent across the bloc in the third quarter. Illustration: Paul Scott
In the final last quarter of 2022 and the first quarter of this year, the Irish economy contracted on the back of a fall-off in pharma exports, meeting the technical definition of a recession, which is back-to-back quarters of negative growth. Domestically, however, conditions didn’t deteriorate.Actors’ strike flirts with an ending, but will the climax be worthy of Hollywood?
The recent sea-change in global demand conditions predicated on a rapid and sudden monetary tightening, geopolitical tensions and the dithering performance of the Chinese economy now pose a challenge, possibly even a check on the globalisation project itself. Weakening conditions internationally are coinciding with a tick-up in unemployment here and a general softening of the labour market albeit from a position of strength.
“The end-October exchequer returns present a mixed picture of our public finances. While income tax and VAT remain steady, demonstrating the underlying strength of our economy, we have now seen corporation tax decline for a third consecutive month,” Minister for Finance Michael McGrath said. “This optimism creates two problems: relatively easy financial conditions could continue to fuel inflation, and rates can tighten sharply if adverse shocks occur – such as an escalation of the war in Ukraine or an intensification of stress in the Chinese property market,” the International Monetary Fund said in a recent blog.
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