Ireland's economy is still "healthy enough" despite entering a  technical recession, according to an Irish Times columnist. 

Cliff Taylor told Down to Business there has been a decline in inflation as of late and that employment remained high.

Inflation in the Irish economy has fallen to 2.3% this month, the country's lowest level in two and a half years.

It is now approaching the European Central Bank's target rate of inflation of 2%.

This comes as Ireland’s economy has entered a technical recession after a fourth consecutive quarter of decline was reported by the Central Statistic Office yesterday.

Mr Taylor said the decline in inflation is large due to energy costs.

“The reason the headline figure has fallen so much is because energy prices have fallen and that has been passed on to consumers to some extent,” he said.

“That has been a key factor in bringing the overall rate of inflation down to 2.3% which is a bigger fall than most people expected.”

Lowered prices

Mr Taylor adds that prices have also lowered elsewhere.

“Prices are moderating across the board. The sharp increases in food prices have eased back as well and, generally, the overall picture is good,” he said.

The Irish Times columnist said lower-income families are often hit the worst by inflation.

“Less well-off households are hit the worst [by inflation] because they do spend a higher percentage of their money on food,” said Mr Taylor.

“They also spend a higher proportion on energy, so on the flip side, the fall in energy prices and the fact that it’s being passed on to consumers will help families.”

Recession

Mr Taylor said things may not be as they appear.

“We had a good few years when the multinational industry was surging ahead [of the rest of the economy] and GDP growth was at 6/7%,” he said.

“I think people realised this growth was an overestimation and now the reverse is happening where the multinational industry is having a bad year and that’s exaggerating things.”

He said the pharmaceutical industry in particular has contributed to the technical recession.

“For big pharma companies, exports surged ahead during COVID with companies like Pfizer who were making vaccines and selling them on from Ireland,” said Mr Taylor.

“We’re now seeing a big fall [in pharma exports]. Long story short, do I think we’re in a recession? I don’t think so.”

Mr Taylor said the economy has slowed down but is still “healthy enough”.

He said employment figures are still strong and we will need to wait until next year to have a clearer picture.

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