Despite stringent measures introduced early in the year due to the Covid-19 crisis, the Irish economy is set to grow by 4.2 per cent in 2021, according to the Organisation for Economic Cooperation and Development (OECD)
It will rise by 5.1 per cent in 2022 on the back of pent-up consumer spending, according to the OECD. They had forecast 3 per cent growth this year in a forecast published in late December.
As The Irish Times reports, the OECD said the economy is poised for a strong recovery with a marked rebound in spending driven by savings that have been accumulated by households during lockdown.
The forecast is included in a new report in which the OECD says the global economic outlook is improving as vaccine rollouts allow businesses to resume operations and as the US pumps trillions of dollars into the world’s largest economy.
The global economy is now set to grow 5.8 per cent this year and 4.4 per cent next year, the OECD said, raising its estimates from 5.6 per cent and 4 per cent respectively in its last forecasts released in March.
Looking at the Republic, it said the easing of Brexit-related uncertainties has improved the business investment outlook. But it said investment will likely remain below its historically high levels in 2019.
OECD said short-term frictions in the Brexit agreement’s implementation could still dampen momentum. It also said rising house prices should support residential investment.
The organisation said in light of persisting risks related to the coronavirus pandemic and Brexit, State policy needs to remain supportive of businesses as Covid-related supports are scaled back.
“Increased targeting of fiscal measures on workers most at risk of long-term unemployment, as well as a simpler examinership scheme for debt-saddled SMEs, would facilitate the reallocation of resources and limit potential scarring effects from the pandemic,” it said.
The global economy has now returned to pre-pandemic activity levels, but has not yet achieved the growth expected prior to the global health crisis, the OECD said in its latest Economic Outlook publication on Monday.
“The world economy is currently navigating towards the recovery, with lots of frictions,” OECD chief economist Laurence Boone said.
“The risk that sufficient post-pandemic growth is not achieved or widely shared is elevated,” she added.