Dr. Robert Kelly:

Ultimately, most countries would think about economic health in terms of GDP. I am sure we have discussed previously, even within this committee, that there are challenges in using GDP for various reasons, such as the activities of globalised firms and things like that. We can potentially use a measure like MDD, which much better reflects the Irish demand. Even there, however, we have seen some very large investments, in particular in some of the multinational sectors. In pharmaceuticals, for example, the level of vaccines produced in Ireland meant there were large levels of investment and there were also some one-off ICT investments. Therefore, even those numbers do not necessarily point to a situation where we would say there is a slowdown in MDD. Some of these factors are moving through the system almost like a wave as we are normalising.

A key metric, and probably the best indication for households with regard to the potential distress they might experience, is whether there is availability of jobs and whether people can work. I did not want it to come across in any way that I was being definitive about the labour market and it is a much more relative statement. In absolute terms, the labour market is tight at below 4% and we do not necessarily expect it to rise from there, or the unemployment rate. There are still shortages, but given the intense imbalance between demand and supply a year ago, we are seeing some more gradual normalisation of that. Perhaps Dr. O'Brien would like to come in with a view. I would point to the labour market as maybe being the key area we would look at in terms of the overall health of the economy.

When we think about the risks to the outlook, for me, there is one crucial component we would talk about. When we look at the global level, what I would say surprised us last year is that while the growth outlook is roughly in line with what we expected, what is way down is the level of trade. Ireland has a small economy and we have seen a contraction in trade. Some of that might be said to be sector-specific but there is also a general downturn. We are expecting a recovery in exports. We expect them to be below the historical level but there will certainly be a recovery. If there was to be an event, whether geopolitical in nature or a disruption to shipping, supply lines or anything like that, it would directly impact an export-oriented economy like ours. I think that is probably the biggest risk facing us currently.