Bank of Ireland Lowers 2024 GDP Growth Forecast to 1.6% Amid Inflation Concerns

Bank of Ireland has revised its forecast for Ireland's Gross Domestic Product (GDP) economic growth this year, reducing it from 2.8% to 1.6%. This adjustment reflects expectations of slower growth, primarily attributed to elevated oil prices, a rising inflation rate, softer export expansion, and more restrained consumer spending.

The bank projects that higher energy costs will drive inflation to 3.3% this year, an increase from 2.2% last year. Despite the lowered growth forecast, the bank asserts that oil prices reaching €100 would not precipitate a recession in Ireland. The jobs market is expected to remain robust, with employment anticipated to expand by 1.8% this year.

Regarding housing, Bank of Ireland forecasts 37,500 new homes will be constructed in 2026, a modest increase from 36,000 last year. However, this figure remains significantly below the over 50,000 units required annually to substantially address the housing crisis. House prices are projected to rise by 4% this year. The bank also noted that a government surplus of €9 billion would serve as a crucial «safety buffer» for public finances, should additional support for consumers and businesses become necessary due to escalating energy costs.

A key uncertainty identified by Bank of Ireland is the timing of an increase in household gas and electricity bills, for which the bank has assumed a 10% rise. Conall Mac Coille, Group Chief Economist at Bank of Ireland, stated, «While the recent rise in oil and energy prices towards $100 per barrel represents an unwelcome squeeze on household real incomes and consumer spending, the Irish economy is expected to show the same resilience demonstrated during Brexit, the Covid‑19 pandemic, and the energy shock that followed Russia’s invasion of Ukraine.» He further cautioned, «There are enormous risks - 20% of global oil supply remains cut off.»