The Irish economy contracted by 7.1% in the first quarter of 2026, reflecting the normalisation of exports after the strong increase in 2025. The slowdown is mainly due to the reduction in advance shipments of products to the US, made by multinationals, particularly in the pharmaceutical sector, before the entry into force of US trade tariffs.
Despite the drop in GDP, indicators of the domestic economy remained positive. Modified domestic demand (MDD), considered a more representative measure of economic activity in Ireland, grew by 0.3% in the first quarter, demonstrating some resilience of consumption and domestic activity.
National accounts data also show that the Irish economy performed very strongly in 2025, with 8% GDP growth and 4.7% domestic demand, driven by increased exports, real wage growth and rising household consumption. Sectors such as pharmaceuticals, information technology, construction and real estate recorded particularly robust performances.
The Government considers that recent developments in the geopolitical environment have reduced some of the risks to economic growth in the short term, while underlining the need to strengthen the resilience of the economy in the face of future external shocks. At the same time, tax revenues continue to grow, reflecting the soundness of public finances and the importance of the contribution of multinationals to the Irish economy.
