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Economy and Finance

Economic forecast for Ireland

The latest macroeconomic forecast for Ireland. 

Indicators 2023 2024 2025
GDP growth (%. yoy) -1.9 1.2 3.2
Inflation (%. yoy) 5.2 2.2 1.9

Real GDP in Ireland declined by 1.9% q-o-q in the third quarter of 2023, extending the recession observed in the first half of the year. This downturn was primarily influenced by sustained weakness in pharmaceutical exports and contract manufacturing activity by multinational enterprises. In contrast, modified domestic demand, which better reflects underlying domestic activity, was broadly unchanged in the third quarter. Consumer spending remained resilient, supported by a strong labour market, while the moderation of previously strong physical investment in 2022 acted as a drag on economic activity. Preliminary estimates suggest a continued decline in real GDP during the fourth quarter of 2023, by 0.7% q-o-q, bringing the contraction in GDP to 1.9% in 2023 as a whole, compared to 0.9% in autumn. 

A resilient labour market, decelerating inflation and rising real incomes are expected to underpin further private consumption growth in 2024 and 2025. Investment is set to grow only moderately in 2024 due to a muted demand outlook and to pick up pace in 2025 as financial conditions continue to ease. Ongoing increases in both housing completions and starts suggest that dwelling investment remains strong over the forecast horizon.

The export outlook is expected to be positive in 2024 and 2025, supported by an improvement in external trade conditions coupled with recent large-scale investments. GDP growth in 2024 has been revised down substantially to 1.2% compared to 3.0% in the Autumn Forecast, mainly reflecting a lower-than-projected carry-over from 2023. In 2025, economic activity is expected to expand by 3.2%, slightly lower than in the Autumn 2023 Forecast. 

HICP inflation decelerated notably in the final months of 2023, largely driven by the pass-through of falling wholesale energy prices to consumers. Annual inflation in 2023 averaged 5.2% and is projected to ease further over the forecast horizon as energy prices and commodity prices recede. Domestic price pressures are expected to continue, driven by sustained tightness in the labour market. Overall inflation is projected at 2.2% in 2024 and 1.9% in 2025, lower than forecast in autumn.