- The Department of Finance economic forecasts that underpin Budget 2022 incorporate significant upward revisions to the near-term growth outlook;
- Modified domestic demand is projected to grow by 5¼ per cent this year and by 6½ per cent next year;
- Modified Gross National Income (GNI*) is projected to increase by 4¾ per cent this year and 5¼ per cent next year;
- The phased lifting of public health restrictions since April has supported a more rapid rebound than previously assumed;
- Consumer spending is leading the way, with households beginning to ‘normalise’ their savings behavior;
- GDP is projected to grow by over 15 per cent, reflecting exceptionally strong export growth in parts of the multinational sector;
- The recovery in the economy is feeding through to the labour market, where the number of people in employment is expected to increase by around 150,000 this year;
- The economic forecasts have been endorsed by the Irish Fiscal Advisory Council, an EU legal requirement
Following endorsement by the Irish Fiscal Advisory Council, the Minister for Finances has today (Thursday) published his Department’s economic forecasts that will underpin Budget 2022. The successful vaccine roll-out and improved health metrics have allowed for a phased re-opening of many sectors of the economy. Consumer spending is leading the recovery in the domestic economy as households begin to normalise their savings. Commenting on the figures, the Minister for Finance, Paschal Donohoe TD, said:
“I welcome the Irish Fiscal Advisory Council endorsement of the macroeconomic projections for Budget 2022. The projections show that the economy is rebounding quickly and this is of course a very welcome development.
“Modified Domestic Demand (MDD) – our preferred measure – is projected to increase by 5¼ per cent this year and by 6½ per cent next year.
“The policy supports put in place – to keep people close to the labour market and to maximise the firms survival rate (PUP, EWSS, CRSS) are showing their worth. They have been costly but I think the cost of inaction would have been even larger.
“The parameters for the Budget remain unchanged from that set out in the Summer Economic Statement; the overall package will amount to €4.7 billion, which is a very significant stimulus” The Minister for Public Expenditure and Reform, Michael McGrath TD, said:
“The direct expenditure supports made available by Government, amounting to some €31 billion over 2020 and 2021, have supported our people, businesses and public services through the pandemic. The core expenditure package of €4.2 billion for Budget 2022, along with the exceptional support earmarked for Covid and Brexit measures, will provide the resources to deliver on key social economic and environmental priorities while continuing to support our people and public services recover from the impact of Covid-19.” Budget 2022 Macroeconomic Forecasts - Summary Budget 2022 Macroeconomic developments and prospects - Presentation by John McCarthy, Chief Economist
Note to editors:The c.15 per cent growth in GDP is a function of very strong growth in a small number of capital-intensive, foreign-owned sectors. There is a significant disconnect between GDP and what is going on in the domestic Irish economy; accordingly, MDD is the Department’s preferred measure of underlying activity. The Irish Fiscal Advisory Council has a statutory obligation under the Fiscal Responsibility Act 2012 to endorse, as appropriate, the macroeconomic forecasts prepared by the Department of Finance on which budgets are based. The Department provided its Budget 2022 forecasts to the Council on 17th September 2021, with a formal presentation on 24th September 2021. The Department’s presentation to the Council (published today alongside the endorsement letter from the Fiscal Council) sets out the Department’s views on the economic outlook and risks. There are minor differences between some of the data in this and the final figures, due to the publication of labour market data on the day of the forecast presentation, which necessitated a minor adjustment to some variables.
Brian Meenan, Press Officer, Department of Finance - 087 219 8857
Claire Godkin, Press Officer, Department of Public Expenditure & Reform – 085 806 3969
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