Irish GDP surged by over 7% in the first quarter of the year, resulting in annual growth of 20%, fuelled by Pharma exports to the US, ahead of the expected tariffs. The following quarters were generally expected to see significant falls in GDP, as exports slowed, but in the event that has not materialised, nor did the Pharma tariffs; GDP did decline in q3, by 0.3%, but that merely offset a 0.3% rise in q2. Consequently annual growth in the third quarter was still in double digits, at 10.8%, with the average of the first three quarters at 16%. Consequently we now expect 14% growth for 2025 as a whole.
Nominal GDP is forecast to rise by 16%, to €665bn, which means the General Government debt ratio falls to 31.5% and could well drop below 30% next year.
Modified domestic demand, a measure preferred by official forecasters, also surprised to the upside, with annual growth of 5.1% in the third quarter, and we now estimate a 4.2% figure for the full year. The q3 figure was driven by a strong rise in spending on machinery and equipment, helping to boost modified capital formation growth of 11%. Government consumption grew by 4.9% but consumer spending has slowed , to 2.4% , despite strong growth in real disposable income.
Exports rose by 2.1% in the quarter, boosted by offshore production, but the positive GDP impact in the quarter was offset by a 10.4% increase in imports, reflecting the spending on machinery and equipment and a big increase in the Intangible component. However, this still leaves annual export growth at 12.7% and as such the main factor behind the double digit rise still evident in GDP.