Economic Overview

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, supported by strong domestic demand and the activities of multinational companies operating in the country. Following two years of double-digit growth, Ireland’s real GDP growth weakened significantly in the first half of 2023 to a modest 0.1% increase year-on-year. For the year as a whole, the IMF estimated growth of 2% amid tighter financial conditions, supply-side constraints, and weakening external demand (although the latest Irish Central Bank projection was at 1.5%). GDP is expected to accelerate by 3.3% in 2024 and 3.2% in 2025, underpinned by increased external demand, buoyed by a robust labour market and rising real wages, which are expected to bolster consumption levels.

Public finances remained sound over the course of the year: the general government budget balance remained in surplus in 2023, at 2.6% of GDP as per the IMF (0.9% according to the EU Commission's latest figures). This year and the next the surplus is expected to contract to 1.8% of GDP. Revenue growth during these years is anticipated to be sustained by resilient, albeit slower, private consumption. Additionally, the gradual phase-out of VAT discounts is projected to contribute to revenue increases. Expenditure growth in 2024 should be propelled by investment plans and substantial social spending initiatives. The Budget for 2024 outlines a comprehensive strategy aimed at addressing both short-term and long-term objectives. This strategy includes a deliberate and planned approach to public spending geared towards achieving economic, social, and climate aspirations, supported by a credible method for managing expenditure in the medium term. It also emphasizes the importance of maintaining flexibility to effectively address immediate challenges as they arise and continuing successful measures to mitigate the impacts of elevated inflation. The total Government expenditure ceiling for 2024 is set at EUR 96.6 billion, comprising core expenditure of EUR 91.2 billion and an allocation of EUR 4.5 billion for non-core expenditure intended to address externally driven temporary challenges. Due to the fiscal surplus and robust nominal GDP growth, the general government debt-to-GDP ratio is predicted to decline from 42.7% in 2023 to 39% in 2024, further decreasing to 35.7% in 2025 (IMF). During the initial nine months of 2023, Harmonized Index of Consumer Prices (HICP) inflation was elevated. The prolonged interval in the transmission of wholesale to retail prices for gas and electricity contributed to enduringly high energy costs in Ireland. Moreover, other prominent HICP categories similarly maintained heightened levels compared to the preceding year. For 2023 as a whole, the IMF estimated inflation at 5.2%. The inflation rate should decrease to 3% this year and 2.4% in 2025, reflecting the impact of the ECB’s monetary tightening and the moderation of growth and labour market tightness.

Throughout 2023, employment levels demonstrated resilience, remaining robust. The surge in employment was bolstered by an expansion in the labour supply, attributed to heightened female participation and inward migration, which significantly augmented the labour force. While additional employment growth is projected for 2024 and 2025, it is expected to occur at a more restrained pace, aligning with the sustained anticipated expansion of the domestic economy. The unemployment rate, estimated at 4.1% in 2023, should therefore record a marginal increase to 4.4% by 2025 (IMF). Wage pressures have been increasing, resulting in nominal wage growth of 5% in 2023 with a further increase to 5.5% expected in 2024. These trends reflect the constraints of a tight labour market and an adjustment of wages to compensate for the significant decline in real incomes observed in 2022. Overall, Irish citizens enjoy one of the highest GDP per capita (PPP) in the world, estimated at USD 126,905 in 2023 by the World Bank.

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 234% of GDP in 2022 (World Bank). In the same year, the pharmaceutical sector constituted 55% of the overall export value, totalling more than EUR 112 billion. Enterprises within the manufacturing & construction sector contributed exports valued at EUR 44.8 billion (22%), while the agri-food sector accounted for EUR 18.5 billion in exports, representing 9% of the total export value. In 2022, the retail & wholesale sector emerged as the primary importer, responsible for importing goods worth EUR 43.2 billion, constituting 31% of the total. Meanwhile, the services sector, encompassing aircraft leasing companies, imported goods valued at EUR 26.5 billion, representing 19% of the total imports. Imports of chemicals & related products accounted for EUR 38 billion (27%), while food & live animal imports accounted for 7% of the total (data CSO).

In 2022, the United States emerged as Ireland’s foremost export market, with exports exceeding EUR 63 billion, constituting 30% of the total. Germany stood as the second-largest export partner, with EUR 25 billion worth of exports (12%), trailed by the United Kingdom with EUR 22 billion (11%). Belgium (8%) and the Netherlands (7%) rounded off the list of the top five export markets for Ireland. The UK was the biggest source of imports in 2022 (21%), followed by the U.S. (16%), China (10%), France (9%), and Germany (7% - data CSO).

The Irish trade balance is structurally in surplus. According to the WTO, in 2022 Ireland exported goods with a record total value of USD 213.6 billion, while imports reached USD 146 billion (+12% and +21.3% y-o-y, respectively). The country also exported USD 355.1 billion worth of services (+2.2%) against USD 372.8 billion in imports (+7.5%). The country’s trade balance was estimated to be positive by 39.9% of GDP in 2022 (World Bank). According to the Central Statistics Office, comparing the first 11 months of 2023 with the same period in 2022, exports of goods were down 5% (to EUR 183.2 billion), while the value of imports fell by 2% (EUR 125.4 billion).

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.