IMF Executive Board Concludes 2025 Article IV Consultation with Ireland

IMF News, June 11, 2025

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Published: June 11, 2025

Overview and Main Findings

The Irish economy "has performed well and entered 2025 in a strong position."
The domestic economy, as measured by the Modified Gross National Income, is estimated to have grown by about 4 percent in 2024.
Growth drivers in 2024: robust consumption and strong net exports, dominated by foreign multinational enterprises (MNEs).
Headline inflation has fallen to target; service inflation remains more persistent.
Labor market: remains tight, although pressures appear to be easing.
General government balance: continued to register a sizeable surplus in 2024, supported by large corporate income tax receipts from multinational enterprises.
Bank lending growth: has strengthened, largely driven by housing and consumer loans.
Outlook: domestic economy projected to continue growing but at a slower pace in a highly uncertain global environment.
Risks: significant external downside risks to growth and public finances linked to concentration in a small number of MNEs, vulnerability to external trade and tax policy shifts, firm- or sector-specific shocks, and a potential sustained reversal of globalization.
Domestic constraints: supply-side constraints could delay attainment of infrastructure and housing goals.

Executive Board Assessment — Key Messages

Directors welcomed the strong economic performance underpinned by robust domestic demand and prudent policies.
Outlook: positive but with considerable downside risks due to high global uncertainty and Ireland’s exposure to trade and investment shocks.
Fiscal policy: emphasize maintaining fiscal prudence and building buffers.
Fiscal stance recommendation: broadly neutral fiscal stance with increased capital expenditure appropriate while the economy is operating at full capacity.
Revenue advice: step up public investment, enhance public spending efficiency, and broaden the tax base to reduce reliance on uncertain corporate tax revenue.
Fiscal framework: strengthen the national fiscal framework to ensure long-term fiscal sustainability and enhance credibility and predictability of fiscal policy.
Financial stability: recognize resilience of the financial sector; underscore continued close monitoring of risks, vigilance given high global uncertainty, and reassessment of macroprudential stance as conditions evolve.
Non-bank sector: welcome progress on reducing risks but urge continued efforts to improve regulation, supervision, and address data gaps in collaboration with international regulators and other jurisdictions.
Competitiveness and resilience: promote linkages between domestic and multinational firms, improve infrastructure, engage in the EU to strengthen the single market, harness benefits of digitalization and AI, and address supply-side constraints in housing (boost construction sector productivity and enhance housing policy certainty).

Projections and Selected Economic Indicators (2021–30)

Table covers Projections for years: 2021, 2022, 2023, 2024, 2025, 2026, 2027, 2028, 2029, 2030 (annual percentage change, constant prices, unless otherwise indicated).

Output / Demand

Real GDP 1/: 16.3, 8.6, -5.5, 1.2, 3.2, 2.1, 2.2, 2.3
Real GNI* (growth rate) 2/: 13.9, 4.6, 5.0, 3.7, 2.4, 2.0
Domestic demand: -16.4, 8.0, 6.0, -11.9, 7.6, 2.5
Public consumption: 6.3, 3.0, 4.3
Private consumption: 8.9, 10.7, 4.8
Gross fixed capital formation: -39.4, 2.8, -25.4, 20.0
Exports of goods and services: 14.1, 13.5, -5.8, 11.7, 3.1
Imports of goods and services: -8.7, 16.0, 6.5, 4.9, 2.7
Output gap: 3.4, 1.0, 0.9, 0.6, 0.3, 0.1, 0.0

Contribution to Growth

Contribution to Growth (series): -13.1, 4.7, 3.5, -7.7, 4.4, 1.4, 1.5
Consumption: 1.6, 1.1, -16.3, 0.8, -5.9
Inventories: 0.2, 1.3, -3.0
Net exports: 29.1, 3.3, -9.1, 9.3, -1.0, 0.7
Residual: -0.3, -0.2

Prices and Labor

Inflation (HICP): 8.1, 5.2, 1.9, 1.7, 1.8
Inflation (HICP, core): 5.1
GDP deflator: 6.8, 3.6
Employment (% changes of level, ILO definition): 6.9
Unemployment rate (percent): 4.5

Public Finance, General Government (Percent of GDP)

Revenue: 22.2, 22.3, 24.3, 27.8, 25.6, 25.7, 26.1, 26.2
Expenditure: 23.5, 20.6, 22.7, 24.2, 24.4, 24.6, 24.8, 24.9, 25.0
Overall balance: -1.4
in percent of GNI*: -2.7, 7.4
Primary balance: -0.6
Cyclically adjusted primary balance: -1.6
Structural primary balance 3/: -0.4, -0.8, -0.9, -0.7

Government Debt

General government gross debt: 52.6, 43.1, 43.3, 40.9, 36.4, 34.4, 33.1, 31.6, 30.2, 29.0
General government gross debt (percent of GNI*): 102.3, 84.2, 75.9, 70.0, 62.8, 59.3, 57.1, 54.5, 52.1, 50.1

Balance of Payments and External Position

Trade balance (goods): 37.5, 39.4, 30.6, 36.6, 36.1, 35.7, 35.6, 35.8
Current account balance: 12.2, 8.8, 17.2, 11.6, 11.1, 10.6, 9.9, 9.2
Gross external debt (excl. IFSC) 4/: 284.9, 229.9, 218.9, 198.0, 179.9, 166.4, 153.3, 140.6, 129.3, 118.9

Saving and Investment Balance

Gross national savings: 35.3, 31.7, 34.6, 31.5, 30.9, 30.3, 29.9, 29.3, 28.8
Private sector: 35.5, 31.8, 29.2, 28.6, 28.4, 27.7, 27.2, 26.8
Public sector: 2.6, 5.3
Gross capital formation: 23.1, 22.9, 26.3, 17.4, 19.3, 19.2, 19.4, 19.5

Memorandum Items

Nominal GDP (€ billions): 449.2, 520.9, 510.0, 533.4, 561.2, 581.1, 603.9, 630.2, 656.8, 685.2
Nominal GNI* (€ billions): 230.8, 267.0, 290.9, 311.8, 325.3, 337.0, 349.8, 364.9, 380.7, 397.2

Notes from the report

1/ Real GDP growth is reported in non-seasonally adjusted terms.
2/ Nominal GNI* is deflated using GDP deflator as proxy, since an official GNI* deflator is not available.
3/ Excludes estimated windfall CIT receipts. In 2024 also excludes CIT receipts of 2.5 percent of GDP following judgment by the Court of Justice of the EU.
4/ IFSC indicates international financial services.
5/ Modified Domestic Demand (MDD) measures Ireland's domestic economic activity by excluding certain capital investment items such as aeroplanes purchased by leasing companies in Ireland and Intellectual Property purchases of foreign-owned corporations from final domestic demand.

Policy Recommendations and Priorities

Fiscal policy:
- Continue to focus on building buffers.
- Step up public investment while maintaining a broadly neutral fiscal stance given full capacity.
- Enhance public spending efficiency.
- Broaden the tax base to reduce reliance on uncertain corporate tax revenue.
- Strengthen the national fiscal framework to ensure long-term fiscal sustainability and enhance credibility and predictability.
Financial stability and regulation:
- Maintain vigilance and close monitoring of financial stability risks amid high global uncertainty.
- Continue reassessment of the macroprudential stance as conditions evolve.
- Improve regulation and supervision of the non-bank sector and address data gaps in collaboration with international regulators and other jurisdictions.
Structural and competitiveness measures:
- Promote linkages between domestic firms and multinational enterprises in innovation cooperation.
- Improve infrastructure to foster competitiveness.
- Continue engagement in the EU to strengthen the single market.
- Harness opportunities from digitalization and AI.
- Address supply-side constraints in housing by boosting construction sector productivity and enhancing housing policy certainty.

Source: IMF press release "IMF Executive Board Concludes 2025 Article IV Consultation with Ireland" (June 11, 2025).