Davy: Irish economy to power ahead despite Ukraine war fallout

Broker projects GDP will surge by 8.2% this year, helped by an outsized contribution from the multinationals, with inflation peaking at 8%

'The more important point is that Ireland’s defensive export sector concentrated in pharma, medtech, and technology should continue to perform despite the uncertainty of events in Ukraine.'

The Irish economy will power ahead this year despite consumer inflation pressures peaking in the early summer from the fallout of the Ukraine war, Davy has predicted. 

In new forecasts, the broker projects GDP will surge by 8.2% this year, helped by an outsized contribution from the multinationals, but inflation peaking at 8% in June will weigh on the domestic economy, which will expand at the slower pace of 6%. 

"The more important point is that Ireland’s defensive export sector concentrated in pharma, medtech, and technology should continue to perform despite the uncertainty of events in Ukraine, just as it did during the pandemic," writes Davy chief economist Conall Mac Coille.   

On inflation, the broker projects hikes in household electricity and gas prices will mean the consumer price inflation reaches a peak of 8% in June, up from 6.7% last month. 

Price pressures bearing down on households will lead to "a soft patch" for consumer spending, according to the forecasts. 

There is also good news for employment, though many of the new jobs amid the Covid recovery have already taken place, and unemployment falls to 4.4% in 2023.    

Davy forecasts home prices will have risen 7% this year, as house completions increase to 26,500 homes and continue to rise to 33,000 new homes next year.