The European Commission issued its summer forecast for 2021 this week. While a swift recovery is expected across Europe, the Commission upgraded its forecasts for the Irish economy, which would see Ireland be the second-fastest growing economy in GDP terms in 2021. The Commission expected a 4.6% growth in the Irish economy previously.
However, a better than expected performance in the first quarter, significant progress on the vaccination rollout and the reopening of the economy in the second quarter boosting domestic demand all leads to 7.2% GDP growth for Ireland in 2021 according to them.
The OECD, on the same day, reported a rather sobering message for Ireland in which they outlined their expectation that the Irish labour market will be one of the slowest to recover globally. They do not expect the labour market to recover to its pre-pandemic state until 2024 as they foresee risks in the form of long-term unemployment even as the economy reopens.
According to Goodbody Stockbrokers, "It is encouraging to see those upgrades coming through at a European level as the message for Ireland now widely appears to be that a speedy recovery is expected. The labour market does however remain highly uncertain, something to which we also concur in our paper. However, we do expect a much quicker recovery in the Irish labour market than that outlined in the OECD report. The Irish government can aid this recovery with a successful management of the unwinding of labour market supports."