Employers’ group Ibec has projected sustained economic growth for Ireland in 2025, with employment expected to rise by 2.4%. The forecast indicates robust domestic demand, set to grow by 3% this year and by 2% in 2026.
Key Economic Projections
Ibec anticipates consumer spending will expand by 3.1%, while investment is forecast to grow by 4.2% in 2025. Overall, GDP is expected to increase by 1.7% this year and by 2.1% in 2026, reflecting steady, albeit moderated, growth in the Irish economy.
Employment figures are also predicted to climb, with nearly 500,000 more jobs expected by the end of 2025 compared to 2019. Despite the positive outlook, Ibec warns that growth is becoming more domestically focused and highlights significant challenges ahead.
Challenges and Competitiveness Concerns
Danny McCoy, CEO of Ibec, stressed the need for Ireland to address critical infrastructure gaps, including water, housing, energy, and transport, to maintain competitiveness and foster economic expansion.
“Our economic forecast largely depends on factors within our own control,” McCoy stated. He emphasized the urgency of delivering infrastructure projects on time and within budget to allay investor concerns about Ireland’s ability to meet its commitments.
Ibec’s report also pointed to the “erosion of competitiveness” as a significant risk, attributing it to delays and cost overruns in infrastructure development.
Impact of Global Developments
The forecast coincides with heightened global uncertainty driven by recent policy announcements from the United States. The withdrawal of US support for the OECD global tax pact under President Donald Trump’s administration has added to investor concerns.
McCoy remarked that the OECD corporate tax rate had benefited Ireland but acknowledged the tax pact’s demise was anticipated regardless of the US presidency. “We knew this was coming. There’s no point in panicking,” he said.
Ibec also warned that US tariffs on imported goods and projected deficits under the Trump administration could exacerbate global inflation and uncertainty.
Wages and Consumer Spending Trends
Domestically, basic pay grew by 4.1% in 2024 compared to 2023, according to Ibec’s survey of nearly 400 HR managers. Consumer spending showed resilience, with monthly credit and debit card expenditure averaging €8.3 billion last year, continuing an upward trajectory.
Despite global headwinds, Ibec’s report underscores Ireland’s robust economic fundamentals. However, it calls for decisive action on infrastructure and competitiveness to sustain growth and navigate an increasingly uncertain global environment.
