The Economic and Social Research Institute (ESRI) has upgraded its forecast for the Irish economy for this year in light of the EU-US tariff deal.
The ESRI now predicts the Irish economy will grow by 3.8 percent this year, that’s up from 2.3 percent growth that it was forecasting back in June.
The ESRI uses Modified Domestic Demand (MDD) instead of Gross Domestic Product (GDP) to measure Ireland’s growth because the institute believes it gives a more accurate picture of the Irish economy under the bonnet.
MDD measures the underlying domestic economy by excluding the impact of multinational corporations.
The Economic and Social Research Institute predicts growth of 2.9 per cent in 2026, up by 0.1 percent on its previous forecast.
“The agreement on tariffs between the US and the EU has removed much of the uncertainty for Ireland that prevailed in 2025. However, the new situation of a 15 per cent tariff represents a clear deterioration in Ireland’s trading environment relative to previous policy regime”, the ESRI warns.
“This will impact the firms and sectors whose exports are most exposed to the US, placing a renewed focus on policies around trade diversification and competitiveness.”
One of the biggest sectors watching tariffs is the pharmaceutical industry.
According to Irish economist, John Fitzgerald, the 15 percent tariffs that the drug companies expect to start paying for exports to the US will impact their profitability.
But he expects them to take this on the chin rather than scaling back output or choosing to make job cuts in Ireland.
The US has not yet announced what the tariff on pharma will be, but the EU has an agreement with Trump to pay a maximum of 15 percent.
The EU gamble is that if Trump sets higher tariffs, Europe will have a better deal than the rest of the world.