Households face worst hit since financial crisis

Published date23 June 2022
Publication titleIrish Times (Dublin, Ireland)
In its latest Summer Economic Commentary, the ESRI said the Irish economy was continuing to perform strongly and would grow at a rate of 6.8 per cent in gross domestic product (GDP) terms this year and by 4.8 per cent in 2023 on the back of strong exports from the multinational sector

However, it said the persistent increase in inflation and uncertainty due to the war in Ukraine would eat into the performance of the domestic economy.

With inflation expected to average higher than 7 per cent this year and earnings expected to grow by just 3.5 per cent, real incomes will contract by up to 4 per cent, the ESRI said, representing the biggest drop in living standards since the 2008-2009 period when the economy imploded in the face of a global credit crunch.

The expected increase in interest rates - the European Central Bank has signalled a sequence of rate hikes from next month - is also likely to dampen investment sentiment, consumer spending and growth in property prices, it said.

So far consumer spending, the biggest component of domestic demand, has remained strong in the face of the...

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