Stability and building economic capacity are key to growth

• Ibec publishes Economic Outlook
• 3% domestic demand growth predicted for 2025
• Employment to rise by 2.4% in 2025 and 2% in 2026.
• Future growth hinges on stability and the Government's delivery of long term investment projects commitments

Ibec, the group representing Irish businesses, today published its new Economic Outlook, forecasting GDP growth of 1.7% in 2025 and 2.1% in 2026. The report highlights that the Irish economy is experiencing a moderation in growth after five years of remarkable expansion. The outlook notes that this is not unexpected, particularly given the turbulence faced by some of Ireland’s largest trading partners and our recent economic success.

Ahead of the 34th Dáil today, the report highlights that the main barrier to continued economic success will be our own ability to create the capacity to grow by delivering critical infrastructure—such as water, housing, energy, transport - effectively.

Commenting on the report, CEO of Ibec Danny McCoy said:

“Ireland has experienced a period of rapid growth. Employment by the end of 2025 will be almost 500,000 higher than it was in 2019. Growth is showing signs of moderating domestically. This is to be expected given the pace of recent years and a challenging global outlook. We expect domestic demand to grow by 3.4% in 2025 and 3% in 2026 and employment growth to slow from 3.1% last year towards 2% in the coming years.

“Amongst our major trading partners, Europe is struggling to readjust its business model to new realities in trade and energy costs. We expect European growth will again struggle to breach the 1% mark in 2025. Meanwhile, it remains to be seen how the new US administration will prioritise between competing domestic and trade policy goals. The strength of the dollar may help mediate the impact of any trade policies on Ireland. Whilst it is critical that Ireland maintains its long-standing reputation for long-term stability on tax and the broader business environment.”

Despite global pressures, Ireland's primary growth barriers are domestic. The EU’s Draghi Report highlights high energy costs, project delays, regulatory burdens, and an incomplete Single Market as challenges for Europe—issues that are equally pressing for Ireland's new government. The main barrier for Ireland is our capacity to deliver projects effectively. Rising capital costs, if coupled with uncertainty and delays, will stifle business investment. Nonetheless, Ireland has clear potential to remain competitive in the coming years, with a skilled and growing workforce, a reputation for openness, a stable political environment, abundant energy potential and a commitment to improving national infrastructure. We have the financial resources and skills necessary to unlock our economic potential for the first time in the State’s history.”

“It is critical key commitments in the new Programme for Government for an Action Plan for Competitiveness and Productivity, measures to enhance the speed and effectiveness of infrastructure delivery and reducing redundant or excessive regulatory burdens on business are advanced with a clear sense of purpose and a renewed energy by the new Government.”