Irish economy expected to continue to grow this year despite tariff treat

KPMG said it anticipates that GDP growth will be 3.3% or greater over the course of the year, excluding the one-off front-loading of exports between January and March. File picture: Getty

The Irish economy is expected to continue to grow this year despite the potential fallout from US tariffs, a new report by KPMG has found, but housing and infrastructure continue to be major risks.

In its latest economic outlook, advisory firm said while the economy grew — both in gross domestic product (GDP) and modified domestic demand (MDD) terms — during the first few months of the year, a large part of the increase was American businesses importing high volumes of products from Ireland, preempting a tariff announcement from US president Donald Trump.

KPMG said it anticipates that GDP growth will be 3.3% or greater over the course of the year, excluding the one-off front-loading of exports between January and March. Growth may moderate to between 1.5% and 2.0% in 2026 as tariffs impact exports.

MDD growth could be 2.5% or greater this year and will be similar in 2026, with this growth driven by domestic consumption and infrastructure spend.

Dr Daragh McGreal, head economist at KPMG, said that indicators of the Irish economy point to a domestic economy that is “ holding up well” despite “ambiguity around the prospects for global trade”.

Mr McGreal said the prevailing view is that US tariffs of 10% will be “most widely applied to EU exports to the US”.

However, while the outlook for the domestic economy is positive, KPMG identities infrastructure and housing as major risks.

It said that the country is “continuing to see all-time high levels of demand for infrastructure and housing, goods, and services and one of the country’s biggest challenges is meeting its own domestic demand”.

Mr McGreal said that the pace at which the housing crisis is being addressed is “too slow” and the longer it goes on the more elevated rents and sales prices drag down overall economic growth.