Even if Ireland avoids recession, economic ‘real feel’ will be tough

Warnings from OECD and Ifac suggest growth will slow in coming months but steer clear of technical recession. However, we will still be feeling poorerThe CSO suggests the number of people in Ireland suffering 'enforced deprivation' has risen sharply on the back of rising energy and food costs. Some 872,000 people have to forgo basic necessities like heating, new furniture and a new coat.

Both the OECD and the Irish Fiscal Advisory Council said Ireland would experience a sharp slowdown but not a recession. Have we dodged a bullet? Not really. By definition, a recession requires back-to-back quarters of negative growth. Growth will remain positive here largely because of multinational exports but that won’t shield households from the compression in real income that awaits them. Real incomes are expected to contract by 4-5 per cent this year and 3 per cent next year.That’s because incomes aren’t keeping pace with inflation, and household purchasing power is being eroded as a result. Put another way, we’re getting poorer.

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