In the intervening period, despite the emergence of the Omicron variant, the economy has proved remarkably resilient, and rather than further pandemic-related output losses being our primary concern, focus has been shifting in recent months to the issue of inflation as a potential economic headwind.
Even before the invasion of Ukraine, inflationary pressures were being stoked by a range of bottlenecks within the global economy, leading to supply-demand imbalances in many sectors.1 From the point of view of the Irish economy, the tragedy unfolding in Ukraine can be thought of as an exacerbating factor which will make more acute many of the difficulties that were already causing inflationary pressures in recent months, in particular relating to energy supply and prices, and availability of other goods including inputs to food production.