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The Irish economy is forecast to grow 7.2 per cent this year and by a further 5.1 per cent in 2022, according to a new European Commission report.
In its summer 2021 economic forecast, the commission has revised up its GDP growth expectation from 4.6 per cent for this year due to a stronger-than-expected first quarter performance.
The revised guidance would see the Republic experience the second highest growth level in the European Union, coming in just behind Romania, which has expected growth of 7.4 per cent.
Last year, the economy grew by 3.4 per cent despite the Covid crisis.
The revised guidance for the State comes on the back of significant progress in the rollout of Covid vaccines in the second quarter which has resulted in a gradual relaxation of restrictions and an uptick in domestic demand.
The commission has said it expects 5.1 per cent GDP growth here in 2022, a slight increase from a previous forecast of 5 per cent in May.
Inflation
In its summer forecast, the commission predicted inflation would rise 1.5 per cent this year and by 1.2 per cent in 2022.
The commission has also updated growth forecasts for the euro zone to 4.8 per cent from an earlier guidance of 4.3 per cent. It expects growth of 4.5 per cent next year.
“The European economy is making a strong comeback with all the right pieces falling into place. Our economies have been able to reopen faster than expected thanks to an effective containment strategy and progress with vaccinations. Trade has held up well, and households and businesses have also proven to be more adaptable to life under Covid-19 than expected,” said Valdis Dombrovskis, European Commission executive vice-president.