of our policy rates. the irish economy 1 / 4 bis - central bankers'speeches as for ireland, economic activity at home slowed noticeably in 2023. the irish economy is still expected to grow over the coming years, albeit at a slower pace. we published our latest quarterly bulletin at the end of december, which sets out our latest assessment of the economy. our forecasts suggest ireland's domestic economy will grow by 2. 5 per cent this year, and by 1. 9 and 2 per cent in 2025 and 2026 respectively. inflation has declined significantly over the course of 2023 and the outlook for inflation is now lower than projections given in our previous forecasts. however, there are a series of general and sector - specific factors that, to varying degrees, underlie recent developments and could affect those current forecasts. first, base effects and a post pandemic normalisation, which mostly relate to the unwinding of the exceptional level of physical investment in the state by multinational enterprises in 2022, as well as in the normalisation of export activity in the pharmaceutical sector post - covid. second, structural factors such as geoeconomic fragmentation in goods and services trade, and capacity constraints in the labour market and in housing, which limit the scope for higher sustainable growth in the domestic economy. third, the general slowdown of activity globally and domestically, as demand is dampened by tighter monetary policy necessary to bring inflation back to sustainable levels. this is already affecting both external and domestic demand developments for ireland, and is contributing to slower growth than would otherwise be the case over the forecast horizon. the resilience of household borrowers in the current economic environment let me turn to the resilience of household borrowers in the current economic environment. there are two key points that i would like to highlight. first, at an aggregate level, the irish household sector has proved resilient in the face of these challenges, and we expect that to continue if economic conditions evolve in line with our forecast. second there are, of course, some borrowers that are more vulnerable and we have been working to ensure that the financial system is ready to deal with cases of financial distress in a consumer focused way. overall, the frameworks we have in place have been working, and we intend to ensure this remains the case. the impact of inflation and rising interest rates on irish household borrowers has been cushioned by nominal income growth, fiscal measures, and the relatively slow passthrou

##gh of monetary policy by lenders to household borrowing rates. the resilience of households has also been supported by more than a decade of balance sheet repair since the previous crisis, fixed borrowing costs for many, low levels of debt and prudent new lending following the introduction of our mortgage measures. we also have a strong labour market, with over 300, 000 jobs created in the past few years. as i said, households have been broadly resilient in this environment but there are pockets of vulnerability and, for some, mortgage repayments have increased significantly, particularly for those on tracker rates but also some borrowers on variable rates and those newly applying for credit. mortgage switching has played a role in ensuring consumers access what they consider to be the best option for their circumstances. switching volumes have increased from 2 / 4 bis - central bankers'speeches €1. 3bn in 2019 to €3. 7bn in 2022, with borrowers continuing to benefit from switching even after the ecb tightening cycle began. moreover, the switching rate of mortgage holders at non - bank lenders increased during 2023, and our estimates suggest that it now stands at around the same level as the switching rate for mortgage holders at retail banks, having been substantially below that for many years. we also saw credit unions beginning to play a growing role in switching last year. nevertheless, we continue to remain focused on how lenders deal with borrowers in financial distress. as i indicated, over the past year we have been particularly focused on ensuring that the financial sector is ready to respond to borrowers who find themselves in a difficult financial position. the most important thing for people who find themselves in difficulty is to contact their financial services provider without delay. we know that early engagement leads to better outcomes. through our work we have seen firms enhance their early warning indicators and customer engagement, widen the suite of alternative repayment arrangements they offer ( including certain limited fixed - rate options ) and the introduction of new support measures for borrowers through the bpfi's " dealing with debt " campaign. the broadly stable arrears trend in 2023 masks some movement in the depth of distress : long - term arrears cases, a scarring legacy of the previous crisis, continue their long - term decline, while early arrears cases and those missing three payments ( but not yet in long - term arrears ) both increased by an offsetting amount. though every case represents a person or household in distress,