Ireland Economic Outlook
GDP rebounded in Q2 compared to Q1. Growth was driven by the multinational sector, according to the statistical office. The volatile nature of the sector means that large revisions to the GDP figure remain possible. Turning to Q3, our panelists expect GDP to continue growing, albeit more slowly. Data for the quarter so far suggests that financial pressures on Irish households are gradually abating: Compared to Q2, inflation and the unemployment rate eased in July, and consumer confidence rose over July–August. This is likely supporting services activity, which continued to surge in July, according to PMI data. In politics, in July, the Prime Minister said the October budget will contain handouts to help businesses and households with winter energy bills. The move should support private spending ahead, without imperiling the nation’s finances thanks to a recently strong corporate tax intake.
Harmonized inflation fell to 4.6% in July from 4.8% in June. The lower reading was driven by a softer rise in food prices and a larger fall in transport prices. Inflation should continue to trend downward ahead due to a tougher base effect, weaker domestic demand and lower average energy prices.