The Irish economy grew at an accelerated rate of 12.6 per cent in gross domestic product (GDP) terms last year as multinationals front-loaded goods exports into the US to avoid tariffs.
The Central Statistics Office (CSO) cautioned that its estimate of GDP growth for 2025 was preliminary and based on “incomplete” data sources.
If confirmed, however, it will make Ireland the fastest-growing economy in Europe and one of the fastest in the world.
GDP increased by 7.4 per cent in the first quarter of 2025 and by 20 per cent year-on-year amid a surge in pharmaceutical exports to the US in advance of US president Donald Trump’s so-called Liberation Day tariff announcement.
A significant part of the surge related to exports by pharma giant Eli Lilly.
The company produces the ingredients for its two blockbuster weight-loss drugs Mounjaro and Zepbound in Ireland.
Either way, it created a bulge in our headline gross domestic product (GDP) metrics.
The Department of Finance has cautioned against using GDP as a gauge of economic growth here because it is distorted by multinationals.
However, it is used by European statistical agency Eurostat to calculate the Republic’s share of economic activity in the euro zone.
A preliminary estimate for growth in the euro zone as a whole in 2025 will be published on Friday.
Irish GDP growth is expected to slow significantly next year as the front-loading effect unwinds.
The department has forecast modified domestic demand (MDD), a more accurate measure of the domestic economy, to expand by 3 per cent in 2025.
The CSO said early estimates indicate that GDP decreased by an estimated 0.6 per cent in the final quarter of 2025, when compared with the previous quarter.
“The decrease was mainly driven by contraction in the multinational dominated Industry sector in Q4 2025,” it said.
The CSO’s preliminary estimate of growth for last year was ahead of the Department of Finance’s forecast for 11 per cent GDP growth.
While highlighting the threat to Ireland from more “aggressive trade policies” in other jurisdictions, the department noted that planned increases in capital spending would have a positive effect on demand.
“Higher tariffs are likely to have some dampening effect on trade, while elevated levels of uncertainty are assumed to weigh on investment spending,” the department said.
“Working in the opposite direction, the large fiscal injection – including the substantial increase in the public capital envelope – will help to support demand over the forecast horizon,” it said.
In a recent report the Economic and Social Research Institute warned that a sudden slowdown in demand for Irish exports linked to changes in US trade policy or a global recession would have a “severe impact” on the economy here.
In a “global slowdown scenario” involving a 5 per cent reduction in export demand, it calculated that economic activity would be 3.2 per cent lower by 2030 compared to a baseline scenario involving no shock while household disposable income would be 6.7 per cent lower than it might have been.