Irish Economy Health Check - Fog Lifting
Our latest Irish Economy Health Check explores how reduced US policy risks, resilient domestic performance, and a sharpened focus on infrastructure delivery are shaping Ireland’s outlook.
US policy risks lowered since the beginning of 2025
Following a period of exceptional policy uncertainty in the first half of 2025, the fog appears to be lifting on the major policy issues that threatened Ireland’s economic model, namely the imposition of tariffs and potential changes to corporate tax policy in the United States. Risks prevail in relation to pharmaceuticals, but a 15% tariff cap and some recent deals provide some clarity and guidance. More protectionist economic policies are a challenge for the Irish economy, but the risks around corporation tax receipts have reduced given the modest tax policy changes that the US Congress has voted through.
Robust domestic performance – forecasts upgraded
Domestic spending has held up impressively well in the context of the uncertain climate. We are upping our forecast for Modified Domestic Demand to 3.6% for 2025 (from 3.0%), with growth of 3.2% and 2.9% forecast for 2026 and 2027, respectively. Ongoing strength in the labour market, aided by buoyant population growth, is playing an important role in consumer spending, while government is playing an outsized role given the limited spare capacity in the Irish economy.
Infrastructure delivery is the number one priority
With short-term risks reducing, Ireland must address medium-term threats to the competitiveness of the Irish economy by focusing its efforts on the efficient delivery of housing, energy and transport infrastructure. Financial resources are not a constraint. The focus is on removing any potential blockages to success.