Ireland

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. As a result, even though Ireland’s GDP dipped in both 2023 and 2024, its underlying health remains strong.

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 fast-growing markets such as the US, a skilled labor force, strong immigration inflows and a low structural unemployment rate.

However, Ireland may face a challenging 2025, with the US set to impose new tariffs on EU imports. The US is the largest export market for Irish companies by far. On the other hand, positive factors include the ECB loosening monetary policy, which will increasingly support private domestic demand as interest rates decline. Business insolvencies have picked up significantly in 2024 but are expected to decline in 2025 and 2026 as access to credit eases and borrowing costs continue to decline.

Ireland's business environment is notably strong, scoring highly in regulatory quality, rule of law and corruption control. 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. However, going forward, the introduction of the minimum global corporate tax reform is expected to modestly dampen Ireland's attractiveness, particularly for multinationals. Furthermore, a further decrease in taxation in the US under the Trump administration may erode Ireland’ competitiveness.

Ireland's recent political developments are centred around the aftermath of the 2024 general election, which highlighted a fragmented political landscape. Despite expectations, Sinn Féin's anticipated surge in support did not materialize. Instead, the centrist coalition of Fianna Fáil and Fine Gael emerged with relative strength but fell short of a majority, necessitating complex coalition negotiations.

Economically, the outcomes of these negotiations could influence Ireland’s policy direction on housing, public spending and climate action, especially with concerns about the cost of living and energy prices.