Long-Term Growth Prospects for the Irish Economy

The long-term outlook for the economy will be determined by fundamental factors such as population growth, investment and productivity. In this Article, we provide a framework for assessing the economy’s long-term growth prospects and evaluate how major structural changes already underway could influence it. Our analysis shows that, as the population ages, the long-term growth rate of the economy is projected to slow by 2050 to below half its historic average growth rate observed over the last half century. The level of inward migration and the length of working lives will affect the extent to which the rate of improvement in living standards can be maintained in light of population ageing. The climate and digital transitions and the effects of trade fragmentation could have a significant impact on the long-run outlook. Sensitivity analysis shows that increases in investment or productivity linked to these transitions could improve long-term growth prospects, but these gains are uncertain and will require concerted policy focus to enable the economy to benefit from the profound changes ahead.