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Optimism increases among Irish businesses in the first half of 2023 as economic constraints ease

Grant Thornton’s latest International Business Report finds that 78% of Irish businesses are optimistic for the economic outlook over the course of the next 12 months

New data from Grant Thornton Ireland reveals that 78% of Irish businesses are optimistic about the outlook of Ireland’s economy for the next 12 months, representing an increase of 22% in comparison with H2 2022. This level of optimism is one of the highest of all economies surveyed by Grant Thornton and is significantly higher than the average figure across the EU which is 56%.

After a decline in business optimism because of the Covid-19 pandemic and the war with Ukraine, it looks like the economy may be rebounding as businesses across Ireland are looking more favourably on the economic outlook for the next 12 months. This growing level of optimism is reflected by the fact that more than half of Irish businesses are expecting an increase in revenue over the next 12 months.

Grant Thornton’s latest International Business Report reveals that sentiment has improved across nearly all countries and regions with 67% of firms globally optimistic.

Commenting on the findings of the Grant Thornton International Business Report, Grant Thornton Ireland Managing Partner Michael McAteer said:

“It is heartening to see that Irish businesses are more optimistic about the coming 12-month period, particularly given the dip we saw in the previous IBR survey. Following the impact of the Covid-19 pandemic and the war with Ukraine, this data paints a picture of a resilient Irish economy that is rebounding despite many challenges over the last few years. Given that Ireland’s level of optimism is one of the highest of all economies surveyed, it highlights the way in which Irish businesses are not merely weathering the challenges of recent years, but actively focusing on diversification and innovation to shape a brighter economic future.”

Decrease in economic uncertainty

The increased optimism among Irish businesses is reflected in a significant decrease in economic uncertainty with only 20% of business seeing it as a constraint to growth for the next 12 months. Comparatively, at the end of 2022 50% of Irish businesses were concerned about the economy, representing a decrease of 30%. Economic uncertainty in Ireland is the lowest of all economies surveyed in the International Business Report, with the global average sitting as high as 58%.

While 53% of Irish businesses still cite energy costs as a key constraint, this figure is down by 16% from H2 2022. Similarly, labour costs are less of concern for Irish businesses in 2023 in comparison to 2022, with the figure falling from 58% to just a third of businesses.

Only 52% of Irish businesses are expecting an increase in their selling prices over the next 12 months, which is down from 68% in H2 2022, suggesting Ireland is beginning to move out of a period of uncertainty as less are offsetting the impact of inflationary pressures via increases in selling prices.

Speaking on the publication of the latest IBR report, Grant Thornton Chief Economist Andrew Webb said:

“While the IBR data indicates there has been a decrease in concern around many of the key constraints facing Irish businesses in the second half of 2022, it is important to note that more than half still cite energy costs and labour costs as having a major impact. It is important that businesses continue to insulate against inflationary pressures while we monitor how the market progresses throughout 2023. But with business optimism climbing, the Irish market is proving resilient suggesting there is hope for continued growth over the coming year.” 

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