ESRI’s Economic Outlook examines various risks to and opportunities for Ireland’s economy for the next decade

December 12, 2025

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On Friday, 12 December 2025, the ESRI will publish its medium-term Economic Outlook. The report highlights the Irish economy’s remarkable performance over the past decade, and warns of vulnerabilities to external risks in the years ahead. In addition, it provides an assessment of domestic policies that would yield substantial benefits.

The Economic Outlook examines how changes in the global economic environment and domestic policies would affect Ireland’s economic trajectory. It first establishes a baseline projection that provides a plausible path for the Irish economy to 2035. This path is subject to a series of underlying assumptions about domestic factors, including demographics and migration, and external factors, such as the recent changes in US tariff policy. The report then explores the potential implications of major external risks through scenario analyses based on plausible assumptions: a global slowdown in economic activity, a loss of competitiveness relative to trade partners, and downsizing by multinational firms. A fourth scenario evaluates the effects of domestic policies aimed at boosting productivity in sectors dominated by Irish-owned firms.

Key findings:

Despite Brexit, COVID-19, and the energy price spike, Ireland’s multinational-led, export-oriented economy has grown strongly.

  • However, the current state of the economy is highly vulnerable to external risks in a pessimistic global economic environment, driven by evolving US trade policy and global geopolitical uncertainty.
  • Ireland’s significant reliance on multinational corporations for employment and corporate tax revenues is the main driver behind these risks, even though these corporations make substantial positive contributions to the Irish economy.
  • Under a baseline scenario where the economy is assumed to grow along its current trajectory without experiencing significant shocks, gross national income (GNI*) is projected to grow by 2.3% per annum out to 2030 and by 2.1% out to 2035.

Compared to our baseline trajectory, scenario analyses show:

  • Global Slowdown scenario: A 5% drop in export demand for Irish commodities could reduce modified GNI* by 3.2% and private consumption expenditure by 6.4% by 2030.
  • Competitiveness scenario: A 5% reduction in wage income and prices in Ireland’s trade partners could reduce GNI* by 3.2% and private consumption by 8.6% by 2030.
  • Multinationals scenario: A 10% employment reduction in pharmaceuticals and information and communication sectors could lower GNI* by 1.5%. It could also lower private consumption expenditure moderately by 1.9% in 2030.
  • Domestic Productivity scenario: Between 2011 and 2024, output per worker grew at an annual average rate of 2.9% in sectors dominated by Irish-owned firms and 11.7% in those dominated by foreign-owned firms. The Domestic Productivity scenario examines the implications of a gradual narrowing of the productivity gap between the Irish and foreign-owned firms. The projected results indicate that GNI* and private consumption expenditures could be 1.1% and 2.4% higher than their baseline levels, respectively, in 2030.

Commenting on the report, author Dr Aykut Mert Yakut of the ESRI stated: “The scenarios with negative external shocks  portray a pessimistic outlook regarding potential implications stemming from the vulnerabilities of the Irish economy due to its reliance on multinational corporations. On the other hand, the results also indicate that carefully tailored strategies aimed at rebalancing the composition of economic activity between foreign- and Irish-owned firms through productivity improvements would yield substantial benefits.”

Commenting on the report, Prof. Martina Lawless, Director of the ESRI, stated: “The baseline projection of our Economic Outlook is one of sustained but moderating growth rates over the next decade. There are a number of risks to this path and also a range of longer-term headwinds that are beyond the time horizon of the projections, such as an ageing population and climate change costs. These suggest that policy interventions now to improve the productive capacity of the economy — investments in education, public infrastructure, research and development — are critical to mitigate the risks and place the country in a strong position to take advantage of opportunities.”