Bank of Ireland Cuts 2024 Growth Forecast to 1.6% Amid Iran War, Inflation

Bank of Ireland has reduced its 2024 economic growth forecast for Ireland to 1.6% GDP, down from 2.8%, citing the Iran war's impact on household income and the unwinding of temporary factors that boosted 2025 exports. The bank projects 3.6% growth for 2025. Despite energy price spikes, a recession is not expected, with the economy anticipated to show resilience similar to that seen during the pandemic and the 2022 energy shock.

Inflation is forecast to average 3.3% this year, restraining consumer spending. March inflation rose to 3.6%, influenced by a 63% increase in home-heating oil prices. Cuts to fuel excise duty reduced inflation by 0.6%, but these are scheduled to be reversed in August. A key uncertainty is the timing of household electricity and gas bill increases.

KPMG also lowered its Republic of Ireland growth projections by 0.5%, expecting 2-2.5% for the full year, down from 2.5-3% at the start of 2026. Bank of Ireland chief economist Conall Mac Coille noted that while oil and energy prices near $100 per barrel squeeze real incomes, Irish households are well-placed to cope, with a 14% savings ratio in 2025 and falling debt. The government expects a €9 billion surplus this year, providing a safety buffer.