Much of news here centres on tech job losses because most have big operations in Ireland. But as Goodbody economist Dermot O’Leary noted: “the potential job losses in Ireland from this wave of announcements is small in the context of the wider labour market to date, amounting to less than 3 per cent of IDA-supported employment.”
He cautioned, however, that the tech retrenchment may have a bigger impact on Government tax receipts because of the downturn in profitability they signal. Despite the brighter outlook, there are still two big economic forces to play out. The final resting place of interest rates and whether they stay elevated for a longer-than-expected period will have a big impact on future growth: central banks are still sounding extremely cautious about the need for continued monetary tightening. The focus is not on how high inflation might go but how long it might linger.
The war in Ukraine, the possibility of a major Russian offensive combined with greater Western involvement, presents another unknown. No one has a handle on how this might play out nor the potential economic fallout that might ensue. So while the outlook has improved, uncertainty remains high.