Economic Outline

Economic Indicators

Since the end of the EU-IMF bailout in late 2013, Ireland has enjoyed steady economic growth and positioned itself as the fastest-growing European economy, supported by strong domestic demand and the activities of multinational companies operating in the country. After a decline of 5.5% in 2023, Ireland’s real GDP further contracted in the first half of 2024, mainly due to ongoing volatility in the multinational-dominated sectors. Headline investment sharply declined in the first half of 2024, largely due to intellectual property exports in the second quarter. However, Irish exports rebounded, driven by a return to growth in pharmaceutical trade and continued strength in service exports, even excluding intellectual property-related activities. Overall, GDP declined by an estimated 0.5% in 2024, with growth projected at 4% in 2025 and 3.6% in 2026, according to the EU Commission (whereas the IMF figures are +2.2%, and +2.4%, respectively). Domestic demand is expected to expand by 2.8% in 2025 and 3% in 2026.

Ireland’s general government budget registered a surplus of 4.4% of GDP in 2024, with a significant portion (2.7 percentage points) driven by a one-off revenue boost from the EU Court of Justice’s ruling on 10 September 2024 regarding tax rulings for two Apple group companies. In 2025, the surplus is forecast to decrease to 1.4% of GDP, as revenue growth is expected to slow without the one-off revenue seen in 2024. While expenditure growth is projected to moderate from 2024, it will remain robust in 2025. The national budget for 2025 assumes strong increases in public sector pay, investment, and social transfers to support living standards and public services. In 2026, the budget surplus is expected to decline to 1.3% of GDP, as revenue is forecast to normalise while higher expenditure levels are anticipated to become more entrenched (EU Commission). Ireland's general government debt-to-GDP ratio is projected to decline from 41.6% in 2024 to 38.3% in 2025 and further to 36.8% in 2026. However, the reduction will be slower than a direct translation of budget surpluses into debt reduction, partly due to transfers to the newly established Future Ireland Fund and the Infrastructure, Climate and Nature Fund, as well as accrual adjustments. Inflation in Ireland eased significantly in 2024, reaching 0.0% in September, primarily due to lower energy and non-energy industrial goods inflation. Headline inflation was projected at 1.4% for 2024, 1.9% for 2025, and 1.8% for 2026 by the EU Commission. However, underlying price pressures persist, with wage growth expected to keep core inflation elevated. Consequently, HICP inflation excluding energy and food is forecast to remain above the headline rate.

Employment remained strong in early 2024, driven by high net inward migration and increased female workforce participation. The unemployment rate remained steady at 4.4% and is projected to stay at similar levels, given the tight labour market. Employment growth is expected to continue into 2025 and 2026, albeit at a slower pace, in line with the ongoing expansion of the domestic economy. Overall, Irish citizens enjoy one of the highest GDP per capita (PPP) in the world, estimated at USD 131,548 in 2024 by the IMF. However, inequalities are still evident: according to the CSO’s “Survey on Income and Living Conditions 2023”, the poorest 20% of the population received 9.6% of the nation's nominal equivalised disposable income, while the richest 20% accounted for 37%.

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