The ESRI report said the economy will grow strongly this year if public health measures continue to be eased.

Prospects improve for Irish economy as ESRI expects 'substantial growth'

The think-tank has outlined its forecasts for the Irish economy in a new report.

IRELAND’S ECONOMY IS expected to show “substantial growth” this year, providing Covid-19 restrictions continue to be eased in the months ahead. 

The Economic and Social Research Institute (ESRI) has published its latest quarterly economic commentary for summer 2021, saying it now projects Ireland’s GDP to increase by just over 11% this year. 

In March, the think-tank had said it expected the country’s gross domestic product (GDP) to expand by 4.4% in 2021. It grew by 3.4% in 2020. 

The new report said that foreign and domestic sources of growth are “likely to contribute considerably to the performance of the economy for the rest of the year”.

Exports grew by 17% in the first three months of this year compared to 2020. The ESRI outlined that although trade disruptions caused by Brexit will likely impact some sectors, overall exports are still expected to grow by 13.3% this year. 

Consumption is set to grow by 7.5% and investment is also set to “grow significantly” in the latter half of this year, the ESRI said, for an overall increase of 5.8%.

Unemployment levels, which have been severely impacted throughout the pandemic, are expected to fall to an average of 16.3% in 2021 and 7.1% in 2022.

The unemployment rate was at a high of 30% in April last year and reduced to 22.4% in April 2021.  

The ESRI’s forecasts for growth are dependent on the continued and more permanent relaxation of public health measures in 2021 and 2022.

The report noted that the pandemic’s impact on the construction of housing means the imbalance between supply and demand is “greater now than it was at the start of the pandemic”. 

Construction activity recommenced on a phased basis in April. The ESRI said it now expects that 18,000 new dwellings will be delivered this year, and 21,000 next year 

Report author Kieran McQuinn of the ESRI said the economy is set to experience “substantial growth rates in both 2021 and 2022 as it emerges from the pandemic”. 

“However, Covid-19 has had a significant impact in terms of the loss of output,” McQuinn said. 

Another ESRI report author Conor O’Toole said: “If public health measures continue to be eased, the Irish economy will grow very strongly this year.

“While the export performance may tip the economy into double digit growth, domestic demand is also expected to rebound strongly with household spending and investment recovering.”

Contains reporting by Ian Curran.

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