The Irish economy grew by 18.5 percent in the first half of this year mainly as a result of a rush over tariff fears, the European Commission says.
Multinational companies – particularly Ireland’s large pharmaceutical sector – massively upped their exports to the US in an attempt to beat the tariffs they expected Donald Trump to impose on them
The US President finally imposed 100 percent tariffs on pharma in September, but an EU deal shielded Irish-based firms from much of that hit.
Over the course of the full year, Ireland’s GDP is set to grow by 10.7 percent, the EU predicts in its Autumn Economic Forecast.
The European Commission says growth will appear to plummet to 0.2 percent next year as the front loading effect dissipates.
Growth will stabilise at 2.9 percent in 2027, the EU predicts.
GDP is a notoriously problematic way of measuring the Irish economy because it is heavily influenced by the activities of multinational corporations, leading to inflated figures that do not accurately reflect domestic economic output.
Modified domestic demand, which “better reflects domestic economic activity in Ireland,” is expected to grow by 3.4 percent in 2025. While employment rates have risen, there are indications of a slight softening in the labour market, with the unemployment rate experiencing a minor increase to 4.6 percent.
Inflation remains stable, averaging 1.8 percent and is expected to hover around 1.9 percent in 2026 before declining slightly in 2027, below the European Central Bank’s objective limit of two percent.
Ireland’s multinational sector presents “significant risks to corporation tax revenues”, the European Commission warns.
The size and sway of US firms on the Irish economy means that international events, and decisions by the US President, could quickly move the goalpost for Ireland.
“Ireland’s growth outlook remains vulnerable to risks stemming from further global trade fragmentation and shifting US policies that could impact the activity and profitability of multinationals operating in Ireland”, the European Commission said.
For the EU as a whole, growth this year has proved better than feared.
“While the strong performance was initially driven by a surge in exports in anticipation of tariff increases, the EU economy continued to grow in the third quarter.
Looking ahead, economic activity is expected to continue expanding at a moderate pace over the forecast horizon, despite a challenging external environment.”