THE IRISH ECONOMY looks set to grow significantly despite major external pressures, a new report from the  Economic and Social Research Institute (ESRI) has found.

It is estimated that Irish GDP will grow by 6.8% in 2022, with the equivalent measure rising by 4.8% next year.

The demand for goods and services is set to increase by a slower pace than previously expected.

The ESRI said it now expects growth of 4.4% in the present year and 3.7% in 2023, compared to 5% and 4.5% in the previous commentary.

“In light of the ongoing war in Ukraine, inflation is set to increase further as the conflict disrupts food and energy markets. As a consequence of increasing price pressures, we now forecast inflation to average 7.1% in 2022,” the report states. 

As well as increased economic growth, the ESRI believes that the unemployment rate nationwide will continue to fall to around 4.3% by the end of the year. This trend is expected to continue and the estimation is that just 4% of people will be out of work by the end of 2023.

Commenting on the report, author Kieran McQuinn of the ESRI said: “We still expect the domestic economy to grow strongly in 2022 and 2023. However, there are significant downside risks to the growth outlook with greater inflationary pressures being the most pressing”.

Conor O’Toole of the ESRI added: “The economy has recovered from the pandemic in a robust fashion, with the labour market recovering particularly strongly. The challenge for policymakers now will be to respond to higher inflation against a backdrop of tight labour markets and rising interest rates.”