US tax code changes may reduce foreign direct investment appeal

AIB said Ireland’s multinational-dominated sectors account for 12% of total employment and 50% of GDP

AIB said the labour market will continue to grow, but at a more modest pace. Following a 2.7% rise in 2024, they see employment growth slowing to 2% this year and to 1.5% in 2026.

AIB has revised down growth forecasts for the Irish economy, citing the considerable shift in the global backdrop since making its previous forecast before the US election.

The bank warned that an escalation in trade tariffs could lead to a slowdown in global and Irish growth in 2025 and 2026, but it forecasts Irish modified domestic demand (MDD) to grow by 2.3% this year and 2% in 2026. AIB's previous economic outlook report, published in October, forecast modified domestic demand to grow by 2.8% in 2025 and 2.7% in 2026.