Ireland: 2023 Article IV Consultation-Press Release; and Staff Report

IMF Staff Country Reports, December 15, 2023

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The 2023 Article IV Consultation highlights that Ireland’s economy has shown remarkable resilience in the face of consecutive shocks and is well-positioned to achieve a soft landing.
Growth is expected to moderate to a still solid level in 2023-24, from a very high base, as tighter financial conditions, domestic capacity constraints, and weakening external demand weigh on the economy.
Tighter financial conditions, persistent inflation, and rising vulnerabilities in the commercial real estate market with linkages to leveraged non-banks call for continued heightened vigilance of financial stability risks.

Growth projection: moderate to a still solid level in 2023-24 (from a very high base).
Key downside pressures:
- Tighter financial conditions.
- Domestic capacity constraints.
- Weakening external demand.

Persistent inflation is a concern; monetary tightening is under way.
Continued fiscal prudence is warranted to complement monetary tightening in sustaining disinflation and to build adequate buffers for the future.

The 2023 fiscal stance is appropriate.
Fiscal policy should avoid adding to aggregate demand amid still elevated inflation; tax revenue over performance should be saved.
Fiscal policy should support growth-enhancing investment and broaden the tax base.
The authorities’ decision to save part of excess corporate income tax revenues in two savings funds is welcome.

Tighter financial conditions and persistent inflation heighten risk.
Rising vulnerabilities in the commercial real estate market, with linkages to leveraged non-banks, require continued heightened vigilance.