Ireland would suffer more severe consequences than other countries if the so-called AI (artificial intelligence) bubble in the US were to burst, the Economic and Social Research Institute (ESRI) has warned.<\/p>\n
The think tank also cautioned that housing completions next year are again likely to come in below Government targets in its latest quarterly bulletin.<\/p>\n
\u201cThis is a risk [related to AI which] we feel is larger for the Irish economy than for other economies outside the US,\u201d the institute\u2019s Conor O\u2019Toole said.<\/p>\n
\u201cWhat we\u2019re seeing in the US is a major increase in investment expenditure related to AI,\u201d he said. \u201cThat isn\u2019t just in IP [intellectual property] or the large language models but in the hardware, the data-supporting infrastructure and the energy provision around running the AI economy,\u201d Mr O\u2019Toole said.<\/p>\n
\u201cThere\u2019s a lot of debate in the US about the extent to which that\u2019s a bubble and what the consequences would be if that bubble was to unwind,\u201d he said.<\/p>\n
US firms have collectively invested over $350 billion in AI technology in the past year alone while most of the uptick in US stock markets is being driven by just seven large tech stocks.<\/p>\n
If these firms were to suffer a sudden loss in profitability, that would impact their global operations many of which are located in Ireland, he said.<\/p>\n
\u201cThis could affect their employment here, their output here and it could also affect the corporation tax receipts that come from these firms,\u201d he said.<\/p>\n
Mr O\u2019Toole also highlighted a separate risk for Ireland related to the shift to the AI economy which, he said, could see a downturn in employment levels across the tech sector here.<\/p>\n
Housing <\/p>\n
In its latest quarterly assessment of the economy, the think tank warned the State\u2019s housing output would remain well below the Government\u2019s 50,000 target for at least the next two years.<\/p>\n
While there was a jump in new home completions in the second quarter of this year, when 9,000 homes were delivered, this has subsequently levelled off, it said.<\/p>\n
Based on three quarters of data, it forecast completions would be in the region of 35,000 this year and, based on the continued slowdown in commencements, about 36,000 next year.<\/p>\n
This would mean \u201canother year when housing output will lag estimates of need\u201d, it said.<\/p>\n
The Government is targeting an annual housing output of 50,000 units, with 300,000 units to be delivered over the next five years. But a sharp slowdown in commencements has placed a question mark over that target.<\/p>\n
Rent pressure<\/p>\n
A special article contained in the bulletin detailed the rent pressure faced by sitting tenants compared to those taking on new tenancies.<\/p>\n
For sitting tenants, the average increase nationally in the 12 months to the first quarter of this year was 2.2 per cent. <\/p>\n
Increases ranged from 4 per cent to 5.1 per cent in counties Kerry, Roscommon, Leitrim, Longford, Cavan and Donegal between the second quarter of 2024 and the first quarter of this year compared with just 1.1 per cent in Dublin, the ESRI found. <\/p>\n
But for those moving, properties in Kerry, Leitrim, Longford, Cavan, Monaghan, Donegal and Tipperary recorded rent hikes of 14 per cent to 18.3 per cent, versus 2.3 per cent in Dublin. <\/p>\n
While most sitting tenants face minimal rental inflation, those facing eviction or seeking new tenancies faced paying \u201cmuch higher rents\u201d, it said.<\/p>\n
Overall, the ESRI said the Irish economy was continuing to perform \u201cpositively\u201d as evidenced by the growth in consumption and tax receipts.<\/p>\n
\u201cHowever, there is evidence of a slight labour market softening, with employment growth likely to continue but at a slower pace,\u201d it said. <\/p>\n
It forecast the economy would grow by 4 per cent this year in terms of modified domestic demand (MDD) \u2013 a metric that attempts to strip out the distorting effect of multinationals in the Republic \u2013 on the back of higher levels of IP investment in the third quarter, and by 2.1 per cent next year. <\/p>\n
In terms of traditional GDP (gross domestic product), it is expected to grow by 13.1 per cent this year before contracting by 5.7 per cent next year, a reflection of the volatility in multinational exports triggered by US tariffs.<\/p>\n","protected":false},"excerpt":{"rendered":"Ireland would suffer more severe consequences than other countries if the so-called AI (artificial intelligence) bubble in the…\n","protected":false},"author":2,"featured_media":100904,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[261],"tags":[291,289,290,24077,179,18,8752,19,17,82],"class_list":{"0":"post-238905","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-economic-social-research-institute-esri","12":"tag-economy","13":"tag-eire","14":"tag-housing-crisis","15":"tag-ie","16":"tag-ireland","17":"tag-technology"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/115739649827856301","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/238905","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=238905"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/238905\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/100904"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=238905"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=238905"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=238905"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}