Dr. Conor O'Toole:

That is a good question. In recent days, we were speaking internally about our commentary and were trying to dichotomise what was happening. There are two countervailing forces. In the absence of the Ukrainian crisis, the Irish economy was recovering quickly. The epidemiological situation was improving rapidly, the domestic economy was kicking back in and the unemployment rate was falling rapidly. We were starting to see signs of overheating – falling unemployment, higher wages and higher price pressures. The international dimension was also a contributor to the inflationary pressures. It was likely that, if these pressures continued and households kept consuming in a rapid fashion, there could be a build-up of vulnerabilities through the overheating channel.

This crisis has created a shock – a roadblock to growth – that we did not anticipate. These uncertainty channels are likely to kick in and slow some of that growth quickly. Households will put off some of their consumption decisions.