Irish economy to see 'exceptional' growth in pharma exports

GDP growth this year will be eight times the euro-area average

At 10.7%, the GDP growth of the Irish economy this year is more than eight times larger than the euro-area average of 1.3%. Picture: Larry Cummins

The Irish economy is forecast to grow exceptionally by 10.7% this year as a result of a surge in pharmaceutical exports to the US earlier this year.

According to the European Commission’s Autumn 2025 Economic Forecast, growth is expected to moderate back to 0.2% next year, as the frontloading effect unwinds. GDP growth is expected to stabilise at 2.9% in 2027.

The threat of pharma tariffs by US president Donald Trump earlier this year led to a surge in exports of products to the US, hoping to ship them out of Ireland before any tariffs take effect. In particular, the surge in the manufacturing of components of new weight-loss drugs has had an outsized impact on our GDP figures.

At 10.7%, the GDP growth of the Irish economy this year is more than eight times larger than the euro-area average of 1.3%.

The EU Commission said economic growth across the continent exceeded expectations in the first nine months of the year, with real GDP growth outperforming the annual expansion projected in spring. 

While the strong performance was initially driven by a surge in exports in anticipation of tariff increases, the EU economy continued to grow in the third quarter.

"Ireland played a significant role in this growth, along with notable contributions from Germany and Belgium," the commission said. "As the effect of frontloading wanes, export growth in the remainder of the year is set to slow down significantly."

Looking ahead, economic activity is expected to continue expanding at a moderate pace over the forecast horizon, despite a challenging external environment.

For Ireland, the commission said inflation was projected to remain contained, while the labour market was expected to continue expanding. The outlook for public finances is positive but marked by significant risks to corporation tax revenues.

It warned the vulnerability of Ireland’s public finances to international developments, such as shifting US trade and tax policies, or the global tax rules, remained the key risk, exacerbated by the significant concentration of revenues in a few pharmaceutical and ICT companies.

The commission's overall forecasts are more upbeat than the latest from the European Central Bank and the International Monetary Fund, with policymakers in the region sounding increasingly optimistic on the months ahead, having seemingly avoided the worst-case scenario on trade, and with inflation now under control near 2%.

“Even in an adverse environment, the EU’s economy has continued to grow,” Economy Commissioner Valdis Dombrovskis said. “Now, given the challenging external context, the EU must take resolute action to unlock domestic growth.”

The commission said recent outperformance was driven by a pre-tariff surge in exports at the start of the year, though investments also contributed. Despite the volatile global backdrop, higher spending by governments, private consumption and a tight labour market should underpin expansion, it said.

Output in the 20-nation currency bloc — which will welcome Bulgaria from January 1 — rose 0.2% in the third quarter, though the headline number masked variations across the region. While Spain and France grew by 0.6% and 0.5%, Germany and Italy stagnated.