THE EUROPEAN COMMISSION has revised its forecast for the expected growth of the Irish economy in 2024 from 3% to 1.2% year-on-year .

The Commission said this substantial cut to its expectation is as a result of the Irish gross domestic product (GDP) rate largely contracting in 2023 and to reflect a lower-than-expected carry-over from last year.

The fall the GDP rate (-1.9%) in the third quarter of last year was as a result of the underperformance of pharmaceutical exports and manufacturing activity from multinational companies.

Despite this fall, the modified domestic demand (MDD) – which is a metric more commonly used in Ireland as it excludes the economic activities of multinationals – is expected to grow at an average of 2% this year, according to most recent reports. 

The Commission said that MDD was broadly unchanged in the third quarter of last year, while GDP tanked. Previous reports suggest that this fall has not impacted the Irish economy.

On an EU level, the bloc’s economy has entered 2024 on “weaker footing than expected” and is largely expected to see minimal growth across all member states this year, according to the Commission’s latest figures today.

Growth forecast for 2024 (%):

🇲🇹 4.6
🇷🇴 2.9
🇨🇾 2.8
🇵🇱 2.7
🇭🇷 2.6
🇭🇺 2.4
🇬🇷 2.3
🇸🇰 2.3
🇱🇹 2.1
🇧🇬 1.9
🇸🇮 1.9
🇪🇸 1.7
🇱🇻 1.7
🇧🇪 1.4
🇱🇺 1.3
🇮🇪 1.2
🇵🇹 1.2
🇨🇿 1.1
🇪🇺 0.9
🇫🇷 0.9
🇩🇰 0.9
🇮🇹 0.7
🇦🇹 0.6
🇪🇪 0.6
🇫🇮 0.6
🇳🇱 0.4
🇩🇪 0.3
🇸🇪 0.2

Winter #ECForecast ↓

— European Commission (@EU_Commission) February 15, 2024

Croatia, Romania, Malta, Cyprus and Poland are all expected to see higher rates of over 2.5%, with Malta’s economy most notably forecasted to grow by 4.6% this year. Ireland is much closer to the EU average of 0.9%.

Inflation rates in Ireland are expected to fall in 2024, with a year-on-year rate of 2.2% forecast by the Commission today. This rate is anticipated to drop below 2% in 2025.

The contraction of the GDP rate did not impact consumer spending, according to the EU’s executive branch. This was as a result of a strong labour market in Ireland, with an unemployment rate of just 4.4% – the highest since the late 1990s.

These factors also reflect the disparages in Ireland when using the GDP rate to measure the growth of its economy.