Ibec says the Irish economy is continuing to show “remarkable momentum and resilience.”
In its latest economic outlook, the employers group says investment and consumer demand, in particular, have held up “despite enormous uncertainty about the global trading environment.”
It is warning that there are challenges ahead, “driven by a slowing global economic environment and continued geopolitical and market volatility.”
Ibec says it expects the more challenging global environment to “translate into weaker growth in the second half of 2025 and 2026” as changes in the global trade environment impact on trade and investment.
However, the business group is still forecasting growth in domestic demand of 3% this year and 2.6% next year, which is a higher figure for 2026 compared to its economic outlook earlier this year.
Ibec says it expects employment, which it says has grown at a remarkable rate in recent years, to slow below 2% next year.
The organisation projects that consumer spending will grow by 2.8% this year, falling to growth of 2.4% in 2026, while investment will expand by 3.4% this year, followed by 2.2% next year.
The business group also says that growth as measured by Gross Domestic Product will expand by 6% this year and 4.1% in 2026.
Ibec’s Head of National Policy and Chief Economist says despite an increasingly uncertain global environment, “the Irish economy continues to show remarkable momentum and resilience, with all indicators pointing to strong current performance, albeit with some caution.”
Gerard Brady says over the first three quarters of the year, “domestic investment has broadly held up, consumer spending has grown at a steady pace, and employment has continued to expand.”
“But we are starting to see early signs of softening in some labour market indicators, including our own member surveys which indicate slower hiring,” he added.
Ibec says Ireland remains in a vulnerable position because of external factors.
Mr Brady says while the public finances are “in a strong position currently, they are also very vulnerable to a more volatile global environment.”
“The Government will need to focus on restoring. Fiscal management must therefore focus on restoring a sustainable balance between income and expenditure over the coming years, excluding excess corporate tax receipts that exceed levels typical in comparable globalised economies,” he added.
Mr Brady says at the same time, “major opportunities lie ahead in the digital and artificial intelligence revolutions.”
