The Central Bank has published its second Quarterly Bulletin of 2026. Inflation forecasts have been revised upwards notably, to 3.5 per cent this year and 2.9 per cent in 2027, and weaker consumer spending is expected in 2026.
However, continued growth in modified domestic demand is projected over the forecast horizon with investment related to multinational enterprise (MNE) playing a prominent role. GDP fell sharply in the first quarter of 2026, highlighting its sensitivity to the (onshore and offshore) activities of a small number of MNEs. A swift resolution to the conflict in the Middle East would see oil and gas prices fall below baseline assumptions, supporting modestly stronger MDD growth and lower inflation than in the central forecast.
At the launch of the Quarterly Bulletin, Robert Kelly, Director of Economics and Statistics said: “The global economy continues to face challenges and heightened uncertainty arising from the conflict in the Middle East. With the disruption in the Strait of Hormuz continuing into its fourth month, despite news of a resolution, uncertainty remains.”
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