Bernard Durkan (Kildare North, Fine Gael)
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257. To ask the Minister for Finance the extent to which this country’s economy continues to compete with other European economies inside and outside the Eurozone; and if he will make a statement on the matter. [11566/23]

Bernard Durkan (Kildare North, Fine Gael)
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260. To ask the Minister for Finance the extent to which he remains satisfied regarding this country’s economic growth trends, with particular reference to the need to compete with other European countries in terms of stability and growth; and if he will make a statement on the matter. [11569/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 257 and 260 together.

Ireland is currently facing many of the same economic headwinds as the wider European economy. Over the past year, almost every advanced economy has had to grapple with the effects of multi-decade high inflation, driven by the surge in global energy prices.

In Ireland average annual inflation stood at just over 8 per cent for 2022 as a whole, significantly higher than the ½ per cent inflation recorded for the previous decade. The elevated level of inflation has had a real impact on households and businesses, with weak economic activity in the domestic economy in the second half of last year.

Against this backdrop, growth in the domestic economy is expected to remain subdued this year as inflationary pressures continue to erode household incomes and weigh on consumer spending, albeit with inflation expected to fall over the year. However, the Irish economy has proven resilient and Ireland is facing into this year from a relatively strong economic position. Indeed, the number of people in employment was recorded at over 2½ million in the fourth quarter of last year, a record level, while the unemployment rate stood at just 4.3 per cent in February – close to the lowest on record. Furthermore, emerging international data suggests that the outlook for the global economy may not be as pessimistic as had originally been thought.

Although projected growth in MDD - my preferred domestic indicator - for this year is low compared to non-Covid years, it compares favourably with our European peers. For 2023, the European Commission recently forecast GDP growth of 0.9 per cent and 0.8 per cent for the Euro area and the EU respectively and the IMF has forecast GDP to fall by -0.6 per cent in the UK.

My Department will update its macroeconomic forecasts as part of the Stability Programme Update next month.