Michael McGrath (Cork South Central, Fianna Fail)
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My Department produces, and publishes, two set of macroeconomic projections each year – its spring forecasts (set out in the annual Stability Programme Update) and its autumn forecasts (set out in the Economic and Fiscal Outlook that accompanies the Budget). Under European law, both sets of forecasts are subject to independent endorsement by the Irish Fiscal Advisory Council.

In April 2023, my Department extended out the forecast horizon for key economic indicators to 2030. As part of the forthcoming Stability Programme Update 2024, which will be published later this month, my Department will once again produce macroeconomic forecast out to 2030.

Over the near term the forecasts will take into account the most recent economic developments, particularly the significant easing in inflation over recent months. This easing in inflation is expected to be sustained throughout the rest of this year, as wholesale energy price cuts pass through to consumers. Along with the continued strong performance of the labour market, the reduction in inflation should support the purchasing power of households and underpin real consumer spending growth. This should drive momentum in the economy into next year.

Beyond the near-term, the economy is facing into a period of structural change characterised by simultaneous economic challenges in the form of decarbonisation, demographic change, digitalisation and de-globalisation – collectively the ‘4 Ds’. Over the medium-term economic prospects will be determined by the availability of capital and labour, as well as how effectively they are combined (i.e. productivity) to produce outputs. Work undertaken by the Department shows that the growth in the ‘supply-side’ of the economy will slow from the second half of this decade, in line with inter alia an ageing population and a structural easing in productivity growth. Over the second half of this decade output, as measured by GNI*, is projected to grow at an average annual rate of 2½ per cent, a moderation on recent decades. The medium-term outlook for investment is more positive. The National Development Plan and private sector requirements for investment in ‘greening’ should see overall growth in investment remain strong compared to historic standards. Overall, the projected medium term growth rates remain robust relative to other advanced economies.