Revised economic and fiscal forecasts in the coming weeks will show the economy performing better this year than in 2023 with inflation falling faster than expected, Minister for Finance Michael McGrath has said.
But while Exchequer returns continue to perform well and the labour market is buoyant, headwinds in the international trading environment could have an impact.
“It is an economy that is doing well but it is operating in an environment of significant international uncertainty and geopolitical tensions, and that does weigh on the performance of our economy,” he said.
“So overall, I think it has performed with remarkable resilience against that backdrop, and I anticipate that it will perform well in 2024 and beyond.”
Public expenditure in January and February was higher than the Government’s target but Mr McGrath said the rise in spending was partly driven by one-off factors. He said he expected public expenditure to come back into line with the Government’s targets.
“While at the headline level, there was significant growth in expenditure to the end of February relative to the same two months last year, when you measure spending against profile, it was ahead of profile by just over 1 per cent.
“So over the course of the remainder of the year, I would expect expenditure will remain broadly on profile, and that is the Government’s objective,” he continued.
“There were some particular one-off factors that explained, in part, the significant increase in expenditure for the first two months this year relative to last year, including, for example, the double social welfare week, for example, would have fallen in the new year this year. Previously it was before the end of the previous year.”
Mr McGrath was speaking in Beijing at the end of a weeklong visit to China during which he also met businesses and the broader Irish community in Hong Kong and Shanghai.
A 90-minute meeting in Beijing on Monday with China’s finance minister Liu Kun focused on the bilateral economic relationship which was worth approximately €45 billion in two-way trade in 2022.
China has criticised the European Union’s policy of “de-risking” and its investigations into Beijing’s subsidies for its electric vehicle industry as protectionist measures.
Mr McGrath said that Ireland was aligned with the broader EU position on trade but he told Mr Liu that the State’s experience of the benefits of international trade informed the Government’s approach.
“I would have reaffirmed to the minister that Ireland will be an advocate for continued engagement and dialogue between the EU and China to see if solutions can be found to some of the issues that have led to tension, because trade is so important to us and that we will continue to use our voice in favour of continued dialogue and engagement between the EU and China with a view to finding solutions,” he said.
“The Irish position is we support international trade, but we do believe that there is a need for the EU to ensure its own economy is resilient and that we can be independent in the manufacture of critical products and that we can ensure we are sustainable into the future.
“So I think it is about achieving an appropriate balance. The terms of trade have to be fair in both directions, and we are in an environment now where there is considerable uncertainty and geopolitical tension.
“But Ireland is a country that has benefited enormously from globalisation and from trade barriers coming down. And so it won’t come as a surprise to anyone that we will continue to advocate for multilateralism and for engagement on trade issues with a view to minimising barriers.”
