well as the very real challenges many people and businesses have faced. we may also see stress in some sectors given higher operating costs and shortages in labour supply. real financial pressures for some businesses will not become evident until the economy reopens fully and supports are fully unwound. and while encouraging, it is as yet unclear how much of the changes in the labour force will persist. and of course the aggregate picture doesn ’ t, to paraphrase robert f kennedy, give us an accurate measure of those things which make life worthwhile. 3 but overall, from what we can see today, the prospects for ireland ’ s economy appear bright. inflation let me turn to inflation. is it temporary? is it transitory? when asked this question, i often think about niels bohr the danish physicist who supposedly 2 / 5 bis central bankers'speeches said “ prediction is very difficult, especially about the future ”. i think this is especially true when we experience a global shock like the pandemic that has led to profound change in our communities, economies and societies. there are many things we know, like where price pressures are emanating from. and we have taken appropriate monetary policy decisions in response. but there are many things we do not know. not many of us would have imagined when doing our start - of - the - year reflections in january 2020 that we would be working from home and living with restrictions on many sectors of the economy for most of the next two years. so we do need to show some humility when making ( or attributing ) simplistic statements. the key question is what is driving inflationary dynamics and what can we reasonably expect in the short to medium term. having reached highs of 5 per cent in december, 4 inflation across the euro area is expected to remain elevated in the near term. we expect it to remain above 2 per cent for most of this year but our forecasts project it to settle below our 2 per cent target in 2023 and 2024. in ireland inflation also surged in recent months, reaching 5. 7 per cent ( hicp ) in the year to december. transport, housing and energy have been the main drivers, although some increase has been evident across most parts of the consumption basket. this inflation is not experienced equally across households. people on lower incomes are especially affected by rising energy and rents. distinguishing between broad - based changes in the general price level and idiosyncratic, temporary, relative price

gabriel makhlouf : the economic outlook for the year ahead remarks by mr gabriel makhlouf, governor of the central bank of ireland, to the institute of directors, dublin, 24 january 2022. * * * good morning, january is a time to think about the future and about the year ahead. to think about getting in shape, exercising more, eating healthier, learning new skills or hobbies, planning a summer break or just wondering what will happen in the six nations. my own start - of - the - year reflections include some of those more than others. today i want to take a look at the developments and outlook for the irish economy, discuss trends in inflation and offer some reflections on how we might build the economic resilience to help us navigate the uncertainty of the future. the irish economy first, let me take a wide lens on the economic outlook given that, as a small open economy, global factors are an important determinant of ireland ’ s success. across the world, we expect the output of advanced economies to converge to pre - pandemic trajectories. the latest oecd projections forecast global growth to moderate from 5. 6 per cent in 2021 to 4. 5 per cent in 2022 and 3. 2 per cent in 2023. 1 this is a strong global outlook, with output surpassing pre - pandemic levels in most advanced economies. taken together, from an economic perspective, those economies are coping well with the pandemic. however, as everyone is aware, there are marked differences due to the spread of the virus, different types of public health interventions to stem the impact of the pandemic, varying access to vaccines, different economic policy responses, and the associated impact given different composition and economic structure of economies around the world. in the euro area, as mobility returns toward pre - pandemic levels, we expect growth to pick up strongly again this year, before slowing towards more historical average rates in 2023 and 2024. 2 turning to home, overall the story on the irish economy is very positive. we are in good shape. the economy is proving very resilient to the pandemic. each successive wave of the virus is having a reduced economic impact, and we expect this trajectory to continue. recent restrictions have also caused some disruption but they have not dampened or derailed the overall momentum of the economy. households and firms have invested and learned to adapt quickly to surges in