Irish economy ends 2021 on stronger-than-expected growth platform, EY report says

The Irish economy is ending 2021 on a stronger-than-expected growth platform, according to a new report from EY.

Details

A statement announcing the news said: “The Irish economy ends 2021 on a stronger than expected growth platform, despite economic and societal headwinds over the past 21 months, according to EY Ireland’s Economic Eye report. remarkable labor market performance and stronger than expected tax revenues reflect a combination of rapid policy response and a resilient and adaptable business base. However, sustained high levels of COVID-19 cases, the Rapidly rising inflation, a tight labor market and the reintroduction of hospitality and travel restrictions present strengthening headwinds for the remainder of the fourth quarter and into the new year.

“The ingenuity and resilience shown by businesses across the island of Ireland will be needed again as new challenges emerge in 2022. A combination of rising prices, talent shortages, a need to act more urgently on environmental issues and the persistence of COVID-19 suggest economic growth will be hard won.

Commenting on the report, EY Ireland Chief Economist Professor Neil Gibson said: “Economic data from the third quarter of this year suggests a labor market that has rebounded to pre-COVID levels in the together with stronger than expected results in many key areas. This was possible thanks to a strong political response, business adaptability and a resilient workforce. However, new restrictions and the reintroduction of policy supports mean that levels of uncertainty are higher than expected heading into the new year.

“Labour market performance is perhaps the most remarkable feature of the pandemic recovery, with only two sectors more than 2% below their pre-pandemic employment levels in Ireland. Combined with data on salary levels and vacancies, it paints a very competitive picture for business in 2022. Migration levels remain constrained and the domestic labor pool is shrinking. Businesses will need to seek new sources of talent, technological responses and new ways of working to attract and retain the talent they need.

EY Ireland Head of Markets Graham Reid said: “Talent is the biggest business issue as we enter the final month of 2021. Companies will need to be creative in attracting and retaining top talent, which may mean offering different types of contracts, mixed workplaces. , and a renewed focus on core values. Wage pressures are likely to intensify in 2022 as the labor market tightens and employees have more choice.

“Price headwinds and labor shortages are partly a function of the resilience of the Irish economy, but they are expected to dampen growth somewhat. In a higher inflation scenario, EY forecasts inflation of 4.5% in 2022 and a long-term rate of 3.0%. This scenario assumes that the recent upward price trend continues in the first half of 2022, with sustained wage inflation, higher energy prices and rising consumer goods costs due to new standards and policies. “

Further information

The statement announcing the news added: “While the overall economic situation is one of rebound, the experience of the pandemic has been very different for different cohorts in society. In particular, the hospitality and des arts are facing further employment and business uncertainty following the latest COVID-19 related restrictions ahead of a typically very busy period. The current period of high and sustained inflation will also impact disproportionately on low-income people, as basic necessities such as food and fuel become less affordable.

“Sustained high levels of uncertainty make it increasingly important for companies to plan for scenarios to ensure they are equipped to deal with a wide range of outcomes. Perhaps it is time to ask whether many long-held macroeconomic assumptions still hold Will inflation and interest rates still be low, will labor still be readily available, and will governments still be able to borrow what they need to support the economy No matter how wide and deep the risk register, we will always need the flexibility, agility and ingenuity to pivot and deal with the unexpected.

“Neil Gibson added: ‘A key lesson of the past 21 months is that many long-held macroeconomic assumptions are now open to questioning. The economic environment is changing, and we cannot assume that tomorrow looks or behaves like yesterday. For this reason, it is important to celebrate success when it comes and to use the skills and resilience acquired to help turn challenges into catalysts for growth.'”

© 2021 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to subscribe to the Hospitality Ireland printed edition.

Pat R. Madsen