Quarterly Bulletin No.4 2021

Read the full Comment for Quarterly Bulletin No.4 2021.

Léigh tráchtaireacht ar an Timpeallacht Gheilleagrach.

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The economy is experiencing robust growth, but vulnerabilities remain. As the easing of public health restrictions continues, the rebound in the Irish economy in recent months is expected to be followed by a sustained period of robust growth through 2023, with domestic activity back to pre-pandemic levels by end-2021, albeit uncertainty remains high. Under the backdrop of a surge in demand, supply bottlenecks and constraints in the labour market, promoting sustainable growth in Irish living standards requires careful management of domestic economic policy as it moves away from a focus on pandemic-related measures.

Read this chapter in full: The Irish Economy.

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The ECB recently completed a review of its monetary policy strategy. Its main outcomes include an updated symmetric inflation target of two per cent, a new integrated analytical framework for monetary policy decision making, a recommendation to include the cost of owner-occupied housing into the Harmonised Index of Consumer Prices, and a plan to incorporate climate change into the ECB’s monetary policy framework.

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Global economic prospects have diverged along vaccine access and policy support lines. While almost all advanced economies are anticipating a normalization of economic activity toward the end of this year, many emerging markets and developing economies continue to face resurgent infections and rising Covid death tolls.

Read in full: International Outlook

This Box provides an update on Irish households’ and firms’ financing activities, focusing on recent data developments. Consumer card spending shows a strong increase in activity in sectors where public health restrictions have eased.

Read in full: Spending, credit, and deposits: An update on Irish households and business activity

The unsuitability of GDP as a measure of both the size of the Irish economy and its rate of growth has been well documented for over 20 years. The problems with using GDP in an Irish context were brought into sharp focus in 2016, when CSO National Accounts data recorded an increase in GDP for 2015 of just under 26 per cent, a year in which employment grew by 3.4 per cent.

Read in full: The Disconnection of GDP from Economic Activity Carried out in Ireland

By August, job postings on Indeed were over a quarter above pre-pandemic levels. Demand for workers in food services, hospitality and tourism, retail, construction, cleaning and sanitation and transport is growing. In some sectors, labour supply has not kept pace, putting upward pressure on wages.

Read in full: Job Openings Rebound in 2021

The pace of annual consumer price inflation has increased substantially in recent months, both in Ireland and across the euro area, US and UK.

Read in full: Drivers of Recent Inflation

While the public finances are forecast to improve in the coming years as the economy recovers and temporary pandemic related spending dissipates, Department of Finance projections indicate that the public finances will remain in deficit out to 2025.

Read in full: The Maturity Profile and Servicing Costs of Irish Government Debt