The threats to competitiveness have become more stark, with the Irish price level currently estimated to be some 12 per cent higher than that of the euro area as a whole. Although our inflation rate by year-end may be less than 3 per cent, it is still likely to be twice that of the euro area.
Over the period 2022-30, the region’s potential output growth is projected by the World Bank to slow to 4.6 per cent a year from 6.2 per cent a year in 2011-21. Falling TFP growth is estimated to account for about three-fifths of the slowdown, with the remaining two-fifths attributable equally to slowing labour supply growth and capital accumulation.