Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Since the end of the EU-IMF bailout in late 2013, Ireland has enjoyed steady economic growth, and positioned itself as the fastest growing European economy. The national economy has been supported by strong domestic demand and by the activities of multinational companies operating in the country. After recording an exceptional growth in 2021 (+13.6%), Ireland’s economy grew at a slower pace in 2022 (+9%) but remained very dynamic. Economic growth is supported by strong interior demand boosted by the full relaxation of the pandemic-related restrictions and dynamic exports from multinational-dominated sectors (IMF). The IMF expects GDP growth to ease to 4% in 2023 and 2024. The war in Ukraine, persistent inflationary pressures fuelled by supply bottlenecks and layoffs in the multinational tech sector will negatively affect growth (IMF and The Economist Intelligence Unit).

Despite the war in Ukraine and the global energy crisis, the Irish economy remained resilient in 2022. In addition to the strong financial performance of multinational companies, consumer and domestic firms’ spending were stimulated by the lifting of COVID-19 restrictions. The government implemented various measures to deal with the consequences of the war in Ukraine, including lower VAT on gas and electricity, discounted fuel prices, reduced public transport fares and allowances for less well-off households (Coface). The wide package adopted in September to support households and SMEs against inflation in 2022-2023 represented 2.6% GDP (OECD). As a result of the various fiscal packages, Ireland's previously balanced budget was pushed into deficit in 2020 (-5.1% GDP) and 2021 (-1.7% GDP), but it returned to a small surplus in 2022 (0.4% GDP) due to the surge in corporate tax revenues (IMF). According to IMF estimates, the budget should remain in surplus in 2023 (0.5% GDP) and 2024 (0.7% GDP). Taking into account the  to the transient nature of corporate tax revenues, the government decided to put EUR 6 billion of windfall tax gains in the National Reserve Fund by 2023 (OECD). Public debt, which is relatively modest compared to the Eurozone average, is expected to continue to decrease, from 47.0% GDP in 2022 to 42.8% GDP in 2023 and 39.2% GDP in 2024 (IMF). In addition to the pandemic-related supply chain delays, the war in Ukraine led to the surge in the prices of many commodities (oil, gas, metals, cereals) in 2022. From 2.4% in 2021, inflation soared to 8.4% in 2022 (IMF). It is expected to remain high in 2023 (6.5%) before declining to 3% in 2024 (IMF). The Budget 2023, coined as a ‘cost of living’ budget, aims at tackling inflation and supporting households and businesses. In addition to these short-term objectives, the priorities are also to ensure sustainable tax receipts, to reinforce the country’s resilience against future shocks, to address housing and health issues and to tackle climate change. Measures include tax credits, refunds, changes in tax rates and rate bands, extension of incentive schemes etc. (PwC) Global economic uncertainty over the war in Ukraine, high inflation, and the volatility of tax revenues that are highly dependent on the activity of multinationals are the main challenges. In the medium term, higher corporate tax rates and tensions around the implementation of the agreement between the European Union and the United Kingdom could deteriorate business climate (OECD).

According to data from the National Statistics Office (CSO), after soaring due to the effects of the COVID-19 pandemic, unemployment rate decreased to 4.3% in December 2022. IMF figures indicate an unemployment rate of 4.7% in 2022, and forecast a slight increase to 4.8% in 2023 and 2024. In November 2020, the COVID-19 Adjusted Measure of Unemployment (considering all claimants of the Pandemic Unemployment Payment (PUP) classified as unemployed) indicated a rate as high as 20.4% (CSO).

Foreign Trade

Ireland is a very open economy, and therefore very dependent on the international economic situation and vulnerable to external shocks. Trade accounted for 229% of GDP in 2021 (World Bank). Ireland’s main imports are aircrafts, biological materials, medicine, automatic data-processing machines, oil and petroleum products and automobiles. The country exports mainly biological materials, medicines, industrial raw materials, electronic parts and medical devices. In 2022, despite the war in Ukraine, the volume of exports of goods and services increased by 10.6% compared to 2020. Similarly, imports increased by 10% (IMF). The IMF forecasts a more moderate increase of exports in 2023 (+5.8%) and 2024 (+5%) and a similar trend for imports (+6.4% in 2023 and +5.4% in 2024).

Ireland's main trading partners are the European Union (the United Kingdom is the main market for imports and the forth largest for exports), the United States, China and Switzerland. The UK’s withdrawal from the EU (Brexit) raises many questions around the future relations between Ireland and its main trade partner. Irish exports are expected to slow down and to suffer from a depreciated sterling pound. The recently introduced higher corporate tax rates may also prompt multinational companies to delocalise.

The Irish trade balance is structurally in surplus. According to the WTO, in 2021 Ireland exported goods with a record total value of USD 190.3 billion, while it imported goods worth USD 119.5 billion. The country exported for 337.8 billion USD of services in 2021, and imported for a value of 341.5 billion USD. According to the Central Statistics Office data, trade balance in goods reached a surplus of EUR 64.8 billion during the 11 months from January to November 2022.

COVID-19 Country Response

Travel restrictions

Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.

Import & export restrictions

A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

The summary of the EU’s economic response to the COVID-19 pandemic is available on the website of the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic), please consult the country's dedicated section in the IMF’s Policy Tracker platform.

Support plan for businesses

For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.