Headlines
Irish economy resilient but challenges loom, central bank warns
Published by Global Banking and Finance Review
Posted on September 17, 2025
2 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on September 17, 2025
2 min readLast updated: January 21, 2026
Ireland's central bank raises 2025 growth forecast to 2.9% amid strong investment and consumer activity, despite global trade challenges.
DUBLIN (Reuters) -Ireland's central bank on Thursday said it had revised its forecast for domestic economic growth for 2025 upwards to 2.9% from 2.0%, boosted by government spending and new data that showed strong levels of investment and consumer activity.
The central bank had cut its estimate for 2025 modified domestic demand (MDD) - its preferred gauge of economic performance - to 2.0% in June due to the uncertainty weighing on investment. The forecasts for 2026 and 2027 have been adjusted slightly to reflect a weaker outlook for energy prices and the effects of a stronger euro.
The bank said employment growth in Ireland remains robust, with unemployment low and inflationary pressures contained, except for food price inflation, which it says is mainly due to a tighter European beef market.
However, there are signs that momentum is easing, with the number of jobs available in the private sector falling, and economic growth in the domestically oriented sectors of the economy lukewarm.
The central bank said it revised its forecast for 2025 gross domestic product - which Irish officials disregard due to the way multinationals distort the data - upwards to 10.1% from 9.7% even though there was evidence that frontloading activity by multinational companies had stalled.
Goods exports from Ireland surged in the early months of 2025 as companies in Ireland ramped up activity in advance of the possible imposition of tariffs by the United States on European Union imports.
Ireland is among the countries most exposed to President Donald Trump's sweeping economic policies, with a significant proportion of employment, tax receipts and exports dependent on a cluster of mainly tech and pharmaceutical U.S. multinationals.
The bank said the effective tariff rates now in place are less severe than initially feared, and unlikely to prompt a material loss of any existing foreign investment in Ireland.
But it estimates the economy will be 1% smaller over the medium term than it would have been without tariffs, and said a further escalation in global trade tensions could result in lower inward investment and present a challenge to the public finances given the country's reliance on corporation tax revenues.
(Reporting by Graham Fahy; Editing by Sharon Singleton)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It indicates how much more expensive a set of goods and services has become over a certain period.
Modified Domestic Demand (MDD) is an economic indicator that measures the total demand for goods and services in a country, excluding the effects of foreign trade, providing insight into domestic economic activity.
Inflationary pressures are factors that contribute to rising prices in an economy, which can include increased demand for goods and services, higher production costs, or supply chain disruptions.
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