David McNamara: Multinational investment a roaring success but Ireland needs stronger domestic performance

Ireland's economy is increasingly reliant on a small number of US companies

The big picture is that the Irish economy has become increasingly reliant on a small number of large multinationals, not only for GDP growth, but to underpin our tax base, says David McNamara.

Last week’s Irish national accounts data for 2025 reveals a similar picture to provisional GDP estimates:  another robust year of growth for the Irish economy. The data also highlight the increasingly lopsided nature of the Irish economy, with growth driven predominately by US multinationals.

While GDP growth wasn’t quite as strong as the initial estimate of +12.3% for 2025, the 8% gain was still exceptional in a European context. Modified Domestic Demand (MDD) and Gross National Income (GNI*) both grew at 4.7%, reflecting very strong physical investment trends in the multinational sector, alongside solid consumer and government spending. On the output side, the breakdown shows multinational GVA (Gross Value Added) up 14.5%, with domestic sectors growing at 2.2%.

The overarching global themes in 2025 of tariffs and the rise of AI are very much to the fore in the Irish data. The first half of 2025 saw a surge in Irish exports to the US ahead of expected tariffs. This was turbocharged by the emergence of weight-loss drug production (GLPs) in Ireland. 

The second theme of AI was evident in the surge in imports and investment in data centre hardware in Ireland, contributing to the recent pick-up in MDD. With this investment categorised as physical capital, it is still captured in MDD, in contrast to other investment activity by multinationals, such as intellectual property, which is often excluded.

Excluding this AI-related investment, essentially capturing domestic SME and construction investment, alongside consumer and government spending, leaves ‘core’ MDD growth at 3.5% for 2025, compared to the headline MDD figure of 4.7%, broadly in line with wages and jobs growth in the domestic economy last year.

The big picture is that the Irish economy has become increasingly reliant on a small number of large multinationals, not only for GDP growth, but to underpin our tax base. Multinational sector output accounted for over 50% of GVA in 2025, up from 48% in 2024. Since 2020, the multinational sector has accounted for over two-thirds of total GVA growth.

New analysis by the Irish Fiscal Advisory Council shows almost €1 in every €5 collected income tax, USC, PRSI, and VAT in 2024 came from foreign-owned firms in manufacturing, tech, and financial services. This comes on top of the 87% of corporation tax coming from multinationals.

This decades-long strategy of attracting US FDI has been a roaring success, beyond even the most optimistic expectations. The recent emergence of GLPs in the pharma sector and AI in tech services is now also bearing fruit in new investments in Ireland. 

Data from the IDA show that FDI remained robust in the first half of 2026, with 190 investments from abroad supporting over 10,000 jobs. However, this success may owe as much to global megatrends as it does to an attractive business environment at home. Indeed, Ireland’s competitiveness has been eroded in areas such as energy costs, transport and housing, while our domestic economic performance bears closer resemblance to the European economy. Rebalancing this uneven performance should be a policy priority in an increasingly fractured global environment.