Ireland Economic Forecast

GDP shrank 1.8% quarter on quarter in Q3 on weaker multinational activity, marking the third contraction in four quarters. Private spending was also likely soft, as suggested by falls in both the services PMI and monthly retail sales in the quarter. Turning to Q4, our panelists expect the economy to rebound. That said, data for the quarter so far has been downbeat. In October, consumer confidence slipped from Q3, as did the manufacturing and services PMIs. Moreover, in that same month, unemployment rose from Q3. Any rebound in GDP is likely to be driven by the volatile multinational sector, with the underlying economy, in contrast, slowing. In other news, an advisor to the EU’s top court—whose opinion the tribunal tends to follow—said in November that Ireland may be entitled to EUR 13 billion in tax from Apple Inc., potentially boosting government coffers but also buffeting FDI.

Harmonized inflation fell to 3.6% in October from 5.0% in September. Price pressures continue to be pushed up by the soaring cost of electricity, gas and mortgage repayments. However, they should nearly halve in 2024 from their 2023 rate on past rate hikes and a tougher base effect. A key upside risk is a possible spike in energy prices.