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The Economic and Social Research Institute (ESRI) is predicting double-digit growth in Ireland’s economy this year.

Ireland’s economic recovery is well underway and the ESRI is forecasting that it will grow by just over 11 per cent – predominantly due to strong demand for exports.

This includes high demands of medical and pharmaceutical products as well as computer services. The ESRI expect this to push growth in GDP terms to 11.1 per cent this year whilst growth in the domestic economy is expected to be 6.4 per cent.

Medical and pharmaceutical products account for around 40 per cent of the value of goods and exports and grew by 9.2 per cent annually. Additionally, computer services account for 61 per cent of total service exports and grew by 20.9 per cent on an annual basis.

However, unemployment is still expected to average out at just over 16 per cent this year, before decreasing to just over 7 per cent next year.

The ESRI’s Quarterly survey also pointed out that this favourable growth and financing conditions give the Government more opportunities to borrow funds to invest in housing. Although, this does not support a return to normal levels of spending on current services.

The potential loss that the economy has faced due to Covid-19 is estimated at around €24 billion. This is based on the output that would have occurred in Ireland, had Covid-19 not existed.

In terms of businesses, the report also notes that over 70 per cent of small and medium-sized companies saw a fall in sales during the first wave of the pandemic. Though, the ESRI are expecting that many firms will have a rebound in the second half of this year, which will prove critical to their survival.

What are we to expect for the economic future of Ireland?

Kieran McQuinn, Research Professor at the Economic and Social Research Institute has said that growth will be relatively unequal because of certain sectors of the economy. Those industries, such as hospitality and tourism, have experienced devastation caused by the pandemic and will continue to struggle for the months ahead.

There will be a short-term challenge in restoring order to the public finances, but these should come back into order as the economy heals.

McQuinn also added that the scope for the Government to borrow, on a modest scale, is a feasible policy option for the Government to consider.

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