Ministers Donohoe and McGrath published the Department of Finance’s economic forecasts that will underpin Budget 2022, following endorsement by the Irish Fiscal Advisory Council. These forecasts incorporate a significant upward revision to the near-term growth outlook.
The Irish Fiscal Advisory Council has a statutory obligation under the Fiscal Responsibility Act 2012 to endorse, as appropriate, the macroeconomic forecasts prepared by the Department of Finance on which budgets are based. The Department provided its Budget 2022 forecasts to the Council on 17 September 2021, with a formal presentation on 24 September 2021. Those forecasts were endorsed on Thursday, 30 September.
The successful vaccine roll-out and improved health metrics have allowed for a phased re-opening of many sectors of the economy. Consumer spending is leading the recovery in the domestic economy as households begin to normalise their savings.
- Modified domestic demand is projected to grow by 5.25 percent this year and by 6.5 percent next year;
- Modified Gross National Income (GNI*) is projected to increase by 4.75 percent this year and 5.25 percent next year;
- The phased lifting of public health restrictions since April has supported a more rapid rebound than previously assumed;
- Consumer spending is leading the way, with households beginning to ‘normalise’ their savings behaviour;
- GDP is projected to grow by over 15 percent, reflecting exceptionally strong export growth in parts of the multinational sector;
- The recovery in the economy is feeding through to the labour market, where the number of people in employment is expected to increase by around 150,000 this year.
Commenting on the figures, the Minister for Finance, Paschal Donohoe TD, said:
“I welcome the Irish Fiscal Advisory Council endorsement of the macroeconomic projections for Budget 2022. The projections show that the economy is rebounding quickly and this is of course a very welcome development.
“The policy supports put in place – to keep people close to the labour market and to maximise the firms survival rate (PUP, EWSS, CRSS) are showing their worth. They have been costly but I think the cost of inaction would have been even larger.
“The parameters for the Budget remain unchanged from that set out in the Summer Economic Statement; the overall package will amount to €4.7 billion, which is a very significant stimulus”
The Minister for Public Expenditure and Reform, Michael McGrath TD, said:
“The direct expenditure supports made available by Government, amounting to some €31 billion over 2020 and 2021, have supported our people, businesses and public services through the pandemic. The core expenditure package of €4.2 billion for Budget 2022, along with the exceptional support earmarked for Covid and Brexit measures, will provide the resources to deliver on key social economic and environmental priorities while continuing to support our people and public services recover from the impact of Covid-19.”
The Budget 2022 Macroeconomic Forecasts summary and the presentation slides are included in the Department of Finance press release.
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