A new survey published today shows that despite the global economic challenges, Ireland’s growth forecast has emerged strongly.
The latest Accenture/S&P Global Ireland Business Outlook survey show a sustained sense of optimism among Irish private sector companies, buoyed by expected improvements in export performance.
The survey reveals that receding energy and raw material price pressures contributed to an overall cooling in inflation expectations, but it also cautions that challenges persist in the form of wage pressures.
However, Irish companies expressed relief as cost pressures appear to be on a downward trend with an upwardly revised outlook for profitability, highlighting an anticipated positive trajectory ahead.
Accenture said the headline net balance for business activity in the combined manufacturing and services sectors fell slightly in June to 43%, from 47% in February.
It said the lower headline figure mainly reflected more subdued optimism in the manufacturing sector (37%) while sentiment among their services counterparts was little changed from February (48%).
Despite this dip, the net balance in Ireland was the highest of the 12 nations for which comparable data are available and much stronger compared with the second half of 2022.
As energy and raw material prices ease, Accenture said that firms’ inflation outlook was generally weaker than seen in the previous outlook survey.
42% of firms predicted higher non-staff costs in the year ahead, down slightly from 44% in February.
Accenture noted that the figure was the lowest since early-2021 but remained historically elevated and behind only the UK and Germany of the 12 nations for which comparable data are available.
By contrast, firms expect staff costs to rise over the next 12 months. 64% of Irish private sector companies believe wages will rise, up from 59% in the previous survey period.
Irish companies also intend to push these cost increases through to customers. However, firms predicting price hikes dropped slightly from 31% to 28% in June.
While still elevated in the context of historical data, this was the lowest reading since February 2021, the survey noted.
Meanwhile, as inflationary pressures recede, firms’ views about their profitability have strengthened. Companies forecasting profit growth in the year ahead was up from 21% to 24% in June. This was the highest reading since February 2022 and the third strongest globally, Accenture said.
Hilary O’Meara, country managing director at Accenture in Ireland, said that Ireland’s growth forecast has emerged as the strongest globally.
“The nation’s growth indicators have remained resilient across the year and it’s encouraging to see an overall cooling in inflation expectations. There remain challenges around wage pressures, labour shortages, and strong market competition but there is a lot to be optimistic about,” she said.