Ireland

Low Risk for Enterprise

Economic risk
Business environment risk
Political risk
Commercial risk
Financing risk

Economic risk
Business environment risk
Political risk
Commercial risk
Financing risk

Economic Overview

Cyclical risks
Financing risks
Structural business environment risks
Political risks

Cyclical risks

Ireland’s GDP is notoriously volatile because of large profit-shifting strategies by multinationals between Ireland and the rest of the world, which create large swings in intellectual property flows. But alternative indicators such as modified domestic demand (MDD), which excludes spending that has little relation to domestic activity, show that the Irish economy has massively outperformed the Eurozone since the pandemic.

The strong economic performance can be attributed to the presence of multinational corporations (notably in the technology, pharmaceutical, chemicals and financial sectors), solid exports to markets such as the US, a skilled labor force, strong immigration inflows and a low structural unemployment rate. The US accounts for 30% of Ireland’s goods exports and much of the inward investment has created well-paid jobs.

The imposition of US tariffs by the US on the EU – to which Ireland belongs – is not a cause of major concern for the Irish economic model and its growth prospects. While more than half of Ireland’s pharmaceutical exports go to the US, a 10-15% tariff is manageable to absorb for the highly competitive Irish pharmaceutical sector. Moreover, Ireland has significant economic strengths. Its economy is built around high value-added services and the government has significant fiscal buffers to mitigate any cyclical downturn.

Business insolvencies have plateaued at elevated levels. While they are far off the peaks reached during the banking and sovereign crisis of the 2010s, insolvencies remain elevated, partly a reflection of rapidly changing business dynamics and demand patterns.

Financing risks

Irish public finances are very strong, thanks to careful management of spending and substantial corporate tax windfalls. The country has consistently run budget surpluses over the past years. As a result, and thanks to strong nominal GDP growth, the public debt-to-GDP ratio has dropped substantially. Healthy public finances provide Ireland with strong buffers to mitigate potential future negative shocks hitting the economy.

On the external front, the country runs massive current account surpluses, thanks to strong exports of high valued-added goods and services (including intellectual property). However, data on external finances should be taken with caution, as they partly relate to tax optimization strategies of multinational firms. Ireland’ inflated external debt, for instance, can be explained by very large amount of inward investment whose purpose is to reduce global tax liabilities.

The possibility that the US may try to reduce tax avoidance schemes could pose a threat to the external and fiscal position. Inward FDIs could drop corporate income revenues decrease. However, the impact on the real economy would be manageable and Ireland’s public finances can also manage. Besides, multinationals may find ways around new tax rules. Finally, Ireland would retain a competitive tax regime, limiting the degree to which multinationals would scale back their ‘real’ activity taking place in the country.

Structural business environment risks

Ireland's business environment is very strong, scoring highly in regulatory quality, rule of law and corruption control. Overall, it had the 3rd best ranking of economic freedom in the world in 2025.

Ireland also has a very well-educated labor force and enjoys a significant openness to foreign trade and FDI. In particular, starting a business, protecting minority investors, paying taxes and resolving insolvencies are ranked at the top among other OECD high-income countries. Going forward, the introduction of the minimum global corporate tax reform is expected to only modestly dampen Ireland's attractiveness, amid significant strengths of the Irish economy that will attractive to corporates.

On sustainability, our proprietary Environmental Sustainability Index places Ireland at 33th out of 210 economies. Ireland scores well on low CO2 emissions and low water stress, but is lagging behind some peers on recycling, energy use and renewable electricity production.

Political risks

Ireland continues to be governed by a centrist coalition led by Fianna Fáil and Fine Gael, together with independent partners, providing a high degree of policy continuity. The government's priorities remain addressing the structural housing shortage, expanding infrastructure and accelerating the energy transition while preserving prudent fiscal management despite strong tax revenues. Housing remains the main domestic political challenge: although the government has launched its 2025–2030 housing strategy, targeting the delivery of more than 300,000 homes by 2030 and introduced additional planning and rental market reforms, supply constraints and affordability pressures continue to weigh on implementation. Overall, Ireland's political environment remains stable, with policy uncertainty low despite a fragmented party system.