Irish GDP fell sharply in the final quarter of the year, by 3.8%, but average growth for the year as a whole was 12.3%. Initial forecasts were much lower (the 2025 Budget was predicated on only 3.9%) but were revised sharply higher over the first half of the year in response to a surge in Pharma exports to the US, as firms brought forward shipments ahead of the expected tariffs. In the event Pharma was largely exempt but export growth did slow and indeed fell in the final quarter, the main factor behind the contraction in Q4.
Nonetheless, exports for the year as a whole rose by €86bn , largely driven by goods, and by 9.6% in volume terms, hence emerging as the main driver of GDP. Imports also picked up strongly, rising by 9.5%, reflecting a strong increase in domestic demand, with modified investment up by 10.9%, the strongest increase in adecade; House building rose by 19%, spending on improvements increased by over 10% with spending on machinery and equipment up by 13%.
Consumer spending increased by 2.9% in real terms, largely geared to services, as retail sales ex cars increased by only 1%. As a result of the investment boom modified domestic demand in total was much stronger than most forecasts envisaged, increasing by 4.9%.
Real GNP, which excludes factor income flows like profits and interest, increased by 2.4% while nominal GDP rose by 13.5% to €639n. As a result the debt/GDP ratio fell to 32.8% from over 38%.