Peadar Tóibín (Meath West, Aontú)
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120. To ask the Minister for Finance if his attention has been drawn to the reduction in the growth of activity and new business within the Irish economy in November, which is the lowest in 21 months; and if he will make a statement on the matter. [61738/22]

Michael McGrath (Cork South Central, Fianna Fail)
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The Russian invasion of Ukraine and the resultant restriction of gas supplies triggered an exceptionally large energy price shock which reverberated throughout the globe, with Europe at its epicentre.

With the global energy markets in flux, almost every advanced economy has had to grapple with the effects of multi-decade high inflation over the past year. In Ireland, consumer price inflation averaged 8.1 per cent over the course of 2022.

Over recent months, a number of high frequency indicators have highlighted the real impact of rising price pressures on both consumers and businesses. The latest Purchasing Manger’s Service Index (PMI) release from December suggests that momentum in the services sector moderated toward the back end of last year as upward pressure on input prices continued to weigh on business activity, though the release showed that activity overall was still up on the previous month.

Wholesale gas markets have begun to ease significantly over recent months. Whilst the inflation rate remains elevated at 8.2 per cent in December, the rate has begun to moderate and now appears to have passed its peak and is on a downward trajectory. That said, the rate of inflation is still expected to remain high.

Against this backdrop, growth prospects for this year remain subdued in the short-term. My Department expects the domestic economy to effectively move sideways over the coming months, before returning to modest growth in the second half of the year. For the year as a whole, my Department forecasts growth in modified domestic demand - a measure of the domestic economy - of just 1¼ per cent. These forecasts will be updated in the Stability Programme Update in the spring.

Despite the numerous headwinds facing the domestic economy the labour market remains remarkably resilient, with well over 2½ million people in employment in the third quarter and an unemployment rate of just 4.3 per cent in December 2022.

Given the high degree of uncertainty at present, the risks to the outlook remain considerable. My Department continues to closely monitor macroeconomic developments and will publish updated macroeconomic projections as part of the Stability Programme Update in April.