Cautious resilience prevailing despite external economic headwinds – Ibec

•  Ibec publishes Economic Outlook
• 3% domestic demand growth predicted for 2025 and 2.6% in 2026
• Weaker growth expected in the second half of 2025 and into 2026 as changes in the global trade environment impact trade and investment

Ibec, the group representing Irish business, today published its latest Economic Outlook, forecasting domestic demand growth of 3.0% in 2025 and 2.6% in 2026. The report highlights the continued resilience of the Irish economy during the first three quarters of this year but warns of more challenging times ahead, driven by a slowing global economy and rising geopolitical and market volatility. According to the Outlook, targeted decision-making will be required to sustain momentum.

As reflected in Ibec’s most recent CEO Pulse survey, conducted in August, business leaders are showing greater caution and cost sensitivity but also a renewed confidence and willingness to make decisions following recent instability. The survey found that 34% of CEOs were more positive about the outlook for their business over the next six months, while 28% were more negative. In March, by contrast, just 15% expressed a more positive outlook, compared to 41% who were more negative. The latest survey also revealed that 59% of companies are reviewing spending plans in response to the current environment, 28% are scenario-planning for supply chain contingencies, and 17% are reassessing global production arrangements.

Commenting on the Outlook, Gerard Brady, Ibec’s Head of National Policy and Chief Economist, said:

“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. 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. We expect that employment which has grown at a remarkable rate in recent years to slow below 2% next year.

However, we remain in a vulnerable position because of the external factors. Whilst the public finances are in a strong position currently, they are also very vulnerable to a more volatile global environment. 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. At the same time, major opportunities lie ahead in the digital and artificial intelligence revolutions.

To seize these, Ireland requires not only a clear strategic vision but also timely delivery in critical areas such as infrastructure, innovation, and skills. The recent Government Action Plan on Competitiveness and Productivity is a welcome plan. As we look toward the upcoming Budget, decisions must prioritise the future-focused investments identified in that Action Plan over short-term spending increases or tax cuts.”