After an exceptional 2025, the Irish economy is expected to enter a period of more moderate growth in the years ahead, according to the latest PwC Ireland Economic Digest.
Ireland can expect to remain economically resilient in the coming year, despite global uncertainty, inflation pressures and softer consumer confidence.
PwC forecasts that Ireland’s headline GDP will contract by 2.5% in 2026 before returning to growth of 3.7% in 2027 and 3.8% in 2028.
“Overall, Ireland’s economy remains resilient, transitioning to more moderate growth in 2027”
The projected decline follows a remarkable 12.3% expansion in 2025 driven largely by a surge in pharmaceutical exports to the United States ahead of anticipated tariffs.
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While headline GDP is expected to decline next year, PwC says underlying domestic activity will remain positive, supported by continued growth in Modified Domestic Demand (MDD), a measure widely regarded as a more accurate reflection of Ireland’s economy.
PwC forecasts MDD growth of 2.7% in 2026, down from 4.6% in 2025, before easing to 2.5% in both 2027 and 2028.
The labour market in Ireland, while still resilient, is showing early signs of softening. As highlighted by the CSO, the seasonally adjusted unemployment rate rose slightly to 5.0% on an annualised basis in June 2026. This suggests that job creation is moderating from the exceptionally strong rates seen in recent years. Despite this, overall labour market conditions remain supportive of economic activity.
As noted by the Irish Credit Union Consumer Sentiment Survey in June 2026, consumer sentiment climbed to 62.2 in June. While this marks two straight months of improvement, it remains well below the long-term average of about 83.
Euro area and global growth outlooks
PwC projects that euro area GDP will outperform Ireland in 2026 but that Ireland’s economy will return to faster growth in 2027.
Growth across Ireland’s key trading partners is expected to soften in 2026 before recovering gradually over the medium-term, reflecting the drag from higher energy and commodity prices, ongoing geopolitical uncertainty, and the lagged effects of earlier monetary tightening.
PwC projects euro area growth to ease from 1.4% in 2025 to 0.9% in 2026, before rising to 1.3% in 2027 and 1.4% in 2028. PwC expects US growth to remain most resilient among major economies, holding broadly steady at 2.1% in 2026 and 2027 and 2% in 2028.
PwC projects UK growth to slow more sharply, from 1.4% in 2025 to 0.9% in 2026, before recovering somewhat to 1.2% in 2027 and 1.7% in 2028.
“Overall, Ireland’s economy remains resilient, transitioning to more moderate growth in 2027,” said Ciarán Nevin, Economics Director, PwC Ireland.
“Policymakers and businesses are navigating a more complex global environment, balancing the opportunities of a strong fiscal position with the risks posed by external uncertainties, inflationary pressures, and softening domestic momentum.”
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