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Ireland’s domestic economy is projected to experience solid growth over the next couple of years, according to the Economic and Social Research Institute (ESRI). The institute expects modified domestic demand (MDD) to increase by 2.3% this year and 2.5% next year. MDD is a measure that removes the influence of multinational companies on Ireland’s economy. Last year, MDD only grew by 0.5% due to factors like inflation and higher interest rates impacting spending and investment.

Despite these challenges, the ESRI anticipates Irish GDP to recover in the next two years as global trade picks up. The institute also highlights the importance of addressing infrastructure bottlenecks for Ireland’s economic growth. These bottlenecks mainly involve issues in housebuilding, renewable energy, and public transport. For example, plans for an underground rail link between Dublin Airport and the city center have been in the works for over two decades and are now at the stage of public planning hearings. Dealing with these challenges will be crucial for sustaining economic growth in Ireland in the coming years.

Although the Irish economy rebounded strongly after the pandemic, it slowed significantly in 2023 due to higher inflation negatively affecting households. Real pay did not grow during this time due to inflationary pressures on wages and salaries. Higher inflation has affected households’ purchasing power, leading to stagnant living standards despite a strong recovery from COVID-19 pandemic shocks. Irish GDP contracted by 3.2% in 2023 mainly because of reduced sales and exports by US pharmaceutical companies operating in Ireland, which are heavily distorting Irish GDP figures as they represent a significant portion of overall economic activity.

In conclusion, while there are challenges facing Ireland’s economy today, such as inflationary pressures on households and infrastructure bottlenecks affecting economic growth, there is hope for recovery in the near future as global trade picks up and infrastructure issues are addressed through public planning efforts such as underground rail links between major cities like Dublin Airport and downtown Dublin City Center.

The Economic and Social Research Institute (ESRI) has recently released its forecast for Ireland’s domestic economy over the next couple of years. According to their projections, MDD or Modified Domestic Demand is expected to increase by 2

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