DUBLIN - Ireland's central bank on Thursday raised its growth forecast for 2021 for the second time this year as the progress of the COVID-19 vaccination campaign, improving consumer sentiment and international tailwinds set the scene for a strong recovery.
In its latest quarterly report, the Central Bank revised its forecast for GDP growth for this year to 8.3%, from 5.9% three months ago.
The move comes after exports by large technology and pharmaceutical firms swelled annual GDP growth in the first quarter to 11.8%.
The Central Bank expects GDP growth of 5.4% in 2022 and 4.8% in 2023.
The bank is seeing a "widespread improvement of consumer and business sentiment" as Covid-19 restrictions are relaxed and vaccines are rolled out, said Director of Economics and Statistics Mark Cassidy.
The domestic economy, as measured by Modified Domestic Demand, is expected to grow by 3.4% in 2021, rebounding from a contraction of 5.4% last year. It will climb to 5.6% next year.
Supply shortages and bottlenecks are likely to lead to higher prices, and the Central Bank is forecasting CPI inflation averaging 1.7% this year and rising to 1.9% in 2022, a sharp hike from a forecast for both years of 0.8% three months ago.
Cassidy said, however that the price pressures were expected to be transitory.
Ireland's unemployment rate, including those receiving temporary COVID-19 jobless benefit, is expected to fall from 18.3% in June 2021 to below 11% in early 2022.
Employment levels are not expected to reach pre-pandemic levels until the second half of 2023, the Central Bank said.
