Ireland will likely experience a drop in GDP this year before bouncing back, the European Commission has warned.
The European Commission’s Spring Economic Forecast has just been published within the last few minutes.
It predicts Ireland’s GDP will fall by 1.2 percent, mainly due to pharmaceutical companies buying ahead of feared Trump tariffs last year.
Ireland had meteoric growth of 12.3 percent in 2025, according to EU data.
After the decline this year, the European Commission expects Ireland’s GDP to grow by 3.4 percent in 2027.
“Growth in domestically driven economic activity is expected to continue. However, the energy price shock [as a result of the war in the Middle East] is expected to push inflation higher, weighing on real income and growth.
The outlook for public finances is positive but marked by significant risks to corporation tax revenues,” the European Commission warns.
Across the European Union, growth is under pressure.
“An exceptional degree of uncertainty surrounds the war in the Middle East,” said European Economy Commissioner, Valdis Dombrovskis.
“Before the end of February 2026, the EU economy was set to keep expanding at a moderate pace alongside a further decline in inflation, but the outlook has changed substantially since the outbreak of the conflict,” the European Commission said.
Across the EU, GDP growth in the EU is now projected to slow down to 1.1 percent this year, shaving 0.3 percent off what was previously forecast.
Inflation in the EU is expected to reach 3.1 percent in 2026 “a full percentage point higher than previously forecast”, the European Commission warns.
It is expected to ease back to 2.4 percent in 2027, but that depends on the war in the Middle East and the availability of oil and gas supplies.