Trump tariffs and consumer uncertainty will cause Ireland’s economic growth to fall considerably next year, the Organisation for Economic Co-operation and Development (OECD) has warned.
The OECD, a respected intergovernmental organisation, has released its latest forecast for the world economy with the warning that the “global outlook is becoming increasingly challenging.”
“Substantial increases in barriers to trade, tighter financial conditions, weaker business and consumer confidence and heightened policy uncertainty will all have marked adverse effects on growth prospects if they persist”, the OECD warns.
Whilst must of the Euro area has been experienced low growth in recent years, the Irish economy has been flying high thanks to the boost of international pharma and tech firms.
But that bubble looks to be falling, not least under the threat of more and higher trade tariffs imposed by the United States.
The OECD now predicts that Ireland’s growth rate will fall sharply next year:
Ireland’s “GDP growth is projected to be 3.7 percent in 2025, before moderating to 2.3 percent in 2026, as trade fragmentation weighs on export-oriented sectors. On the domestic side, heightened uncertainty will encourage households to save more, despite sustained nominal wage growth underpinned by a tight labour market.”
Tariffs are a particular concern.
“As the United States is Ireland’s biggest export market and multinationals play a large role in Irish exports and tax revenues, higher tariffs or non-tariff trade barriers would lower growth and exacerbate medium-term fiscal challenges.”
So far this year, growth has been bolster by a rush to beat Trump tariffs by exporting before they come into force.
The US president has threatened to add tariffs on the EU’s, and therefore Ireland’s, important pharmaceutical sector, but hasn’t done so yet.
“According to preliminary estimates, GDP grew strongly by 3.2 percent in the first quarter of 2025, mainly reflecting strong exports of pharmaceuticals despite considerable global uncertainty…Going forward, tariff-related uncertainties will weigh on consumer confidence.”
The OECD’s advice to the Irish government is to keep reforming and investing.
“Prioritising productivity-enhancing reforms, spending efficiency, and stricter domestic fiscal controls will be key. Planned infrastructure investment should be implemented, albeit properly sequenced to avoid adding to inflation.”