The Economic and Social Research Institute (ESRI) reports that April saw the first real wage growth in over two years, due to a slowing rate of inflation and a robust job market with the unemployment rate holding steady around 4%. According to the latest quarterly financial review by the ESRI, real wages – which are determined by subtracting inflation from nominal pay growth – are projected to rise by 2.2% this year and by a larger 3.1% in 2025.
Kieran McQuinn, a research professor at ESRI, emphasises the essential role of drawing in migrants in supporting economic growth and labour market expansion, which saw numbers exceed 2.7 million for the initial time the previous year. Mr McQuinn underlined the critical input immigrants have in various labour sectors, noting particularly the health and social work sectors where more than 1 in 5 workers hail from non-EU countries. He suggested that Ireland could learn from the UK’s Brexit labour challenges.
Last week, Davy, a Stockbroking firm, projected that nearly 85,000 new homes need to be constructed each year for the coming decade to rectify the prevalent housing deficit and to accommodate the predicted population surge. They forecast a population growth up to 5.9 million by 2030, an increase of 524,000, or 10%, from the Government’s National Planning Framework (NPF) baseline of 5.36 million.
Meanwhile, the ESRI expects that the number of completed homes this year will match that of 2023, with 33,000, but will see a rise to 37,000 in 2025. The report concludes with a call for a significant financial infusions into various sectors of the local economy.E
The ESRI’s most recent quarterly fiscal assessment predicts an increase in adjusted Irish domestic demand, a key predictor of economic expansion which primarily eliminates the influence of multinational enterprises in Ireland. From a growth rate of 0.5% for the prior year, it is expected to rise to 2.2% by 2024, and 2.9% by 2025.
Further, a projection of a wider economic marker, the Gross Domestic Product (GDP), reveals a 2.5% expansion for this year. Albeit after a 3.2% slump in 2023, attributed to decreased activity within the realms of pharmaceuticals and information technology.
Supporting this growth is a global economy in recovery, a faster release from inflatory pressure than anticipated, the commencement of official interest rate reductions, and a resilient home-grown work market. Earlier this month, the European Central Bank (ECB) lowered its primary rates by 0.25 percentage points, adjusting its principal lending rate to 4.25%.
A decrease in the yearly Irish inflation rate was noted in May, down to 2.6% from a peak of 8.5% at the start of 2023. In the face of this, ESRI has urged the government to ensure that Budget 2025, due to be the last one preceding the forthcoming general election, does not contribute to the inflation.
ESRI asserts that considerable investment is necessary within a variety of sectors in the domestic market. Consequently, it’s critical that financial strategy is kept in check to make certain that enhanced government spending, particularly in investment, does not unduly stimulate the economy in other sectors such as fiscal policy.