Cork TD warns Central Bank modest growth forecast will not be enough to make a difference

A CORK North-Central TD has said that the modest growth predicted in the Central’s Bank first Quarterly Bulletin of 2024 is not enough to make a difference.

The Bulletin “forecasts average wage growth per employee outstripping inflation over the forecast horizon, supporting a rise in household purchasing power and underpinning growth in consumption.” 

The report examines several positive trends, such as the unemployment rate remaining close to all-time lows, and this rate is expected to average 4.5% until 2026.

Forecast

Modified domestic demand is forecasted to grow by 2.2% in 2024, 1.9% in 2025 and 2.0% in 2026, and though exports produced in Ireland declined in 2023, the authors said they “should recover in 2024 and beyond, driven by a return to growth in pharmaceutical trade.” Overall inflation is set to decrease significantly in 2024, from over 5% down to 2%, and then drop lower again to 1.8% and 1.4% in 2025 and 2026 respectively.

The report identifies risks that could cause the economy to “deviate from the current projected path of stable growth and lower inflation,” the first being that energy prices could rise again.

Cork Sinn Fein TD Thomas Gould said, “even the reduction in energy prices we’re seeing at the moment - we still haven’t reached the levels we were at originally.

“Whether it’s fuel, diesel, petrol, electricity, gas, we have some of the highest energy bills in Europe, and the government should be doing more to bring us in line with our European neighbours.

“Another thing is food inflation — ask anyone who does a weekly shop, there’s been dramatic increases in food inflation over the last two years and people haven’t yet seen the prices of food go down.” 

Inflation

Energy and food inflation rates are expected to be -6.3 and 3.7%, respectively, Central Bank predict, but this reduction in energy prices isn’t certain, as “with geopolitical tensions remaining elevated, energy prices could diverge from their current downward trend, putting renewed upward pressure on inflation.” 

The experts also predicted that housing completions this year will increase to 35,000 units, to 36,500 and to 37,000 in 2025 and 2026, but added, “These forecasts are conditional on limited delays in the planning system and improved connection times to utilities.”

The experts warned, “Delayed progress in addressing capacity constraints in housing and other infrastructure could generate higher and more persistent price and wage inflation and damage competitiveness.” 

Mr Gould said that the projected houses was not enough, stating “anyone in the housing industry will tell you that the government needs to deliver at least 50,000 to solve the housing crisis, and until we can do that everything else will suffer, because housing ties into everything else in the economy.”