Irish GDP to grow 5.6% but Germany and Britain set to contract

That means the Irish economy is set to expand by the fastest rates in the eurozone over the next two years.

Irish consumer price inflation, which was running at 8.5% in February, will average 5% this year and slow to 3.2% in 2024, the forecasts show.

The IMF sees inflation pressures easing slowly across major economies over the next two years as “the massive and synchronous” rate hikes by global central banks start to rein in consumer prices.

However, the German economy will contract by 0.1% this year, even as other major economies such as France, Italy, Spain, and the Netherlands, as well as the eurozone-wide economy as a whole, avoid contracting, said the IMF.

British economic output will not fall as deeply as once thought but will nonetheless contract by 0.3% this year and grow by only 1% in 2024, according to the projections.

That means that British economic contraction this year is set to be the biggest among the Group of 20 economies.

The Washington-based fund also warned about the “rocky road” ahead for recovery for major economies, warning that a severe flare-up of the banking market turmoil of recent weeks could slash output to near recessionary levels for the global economy.

“On the surface, the global economy appears poised for a gradual recovery from the powerful blows of the pandemic and of Russia’s unprovoked war on Ukraine,” said the IMF in the outlook.

However, there is “a plausible alternative scenario” in which the global economic recovery is slowed further should the banking turmoil re-emerge, it warns.

“The outlook is uncertain again amid financial sector turmoil, high inflation, ongoing effects of Russia’s invasion of Ukraine, and three years of covid,” it said.

“Notably, emerging market and developing economies are already powering ahead in many cases.

“The slowdown is concentrated in advanced economies, especially the euro area and the United Kingdom.”