Mark Cassidy: Economic outlook and the importance of applying a distributional lens

Remarks by Mr Mark Cassidy, Acting Deputy Governor of the Central Bank of Ireland, at the Business Show, Dublin, 6 October 2022. 

Central bank speech  | 
10 October 2022

Good morning everyone. I am delighted to have the opportunity to be with you today.

Yesterday the Central Bank published its fourth Quarterly Bulletin of 2022 with revised forecasts for growth, employment and inflation out to 2024.  The overriding message is clear.  Ireland has faced two successive shocks in recent times: a global pandemic and the invasion of Ukraine by Russia. As a result, the conditions now facing households, businesses and policy-makers are markedly different from those in the decade leading up to the arrival of Covid.  And uncertainty around the outlook is particularly high, and likely to remain so over the coming months, linked as it is to the Russian war in Ukraine, spillover effects to energy markets, and the ability of households, businesses and the public finances to absorb higher costs.

This morning I would like to discuss, first, what these shocks mean for the economic outlook for Ireland. Second, the monetary policy response that is underway, and third, the importance of considering the distributional impact of both shocks and our responses to them.

Let me begin with the economic outlook. Following the easing of Covid-related restrictions, the domestic economy, in aggregate terms, recovered more rapidly than most economists could have predicted.  By the end of 2021, the level of domestic economic activity was already back to pre-Covid levels, and the conditions appeared to be in place for further broad-based economic expansion during the coming years.  Our exports had continued to grow very strongly right throughout the pandemic, driven by the pharmaceutical and ICT sectors, which also fed through positively to the public finances, and a sharp rise in corporation tax receipts in particular.