The Irish economy contracted by 7.1 per cent in the first three months of 2026 as the front-loading of exports linked to US tariffs unwound.
This compares with a preliminary estimate of a 12 per cent contraction – in gross domestic product (GDP) terms – published by last month.
The volatile numbers come on the back of a surge in exports last year as pharma firms here rushed to stockpile product in the US ahead of Donald Trump’s tariffs.
The Central Statistics Office’s (CSO) latest national accounts indicated, however, that the domestic economy as measured by modified domestic demand (MDD) continued to grow in the first quarter, expanding by 0.3 per cent.
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Tánaiste and Minister for Finance Simon Harris said the figures confirmed that “momentum continued into the first quarter”.
Harris said the recent agreement between the US and Iran to solidify their ceasefire and re-open the Strait of Hormuz meant the Government’s more severe growth shock scenario was “receding.”
“Geopolitical events in the first half of this year underline the importance of continuing to build up our resilience to future shocks and tackle longer-term structural challenges, including by accelerating the transition away from fossil fuel imports,” he said.
Half-year exchequer numbers due on Friday will give an indication of the Government’s fiscal position as budget negotiations heat up.
Government tax revenues to the end of May amounted to almost €39 billion, up by 6 per cent.
The latest CSO figures indicated the Irish economy grew by 8 per cent in GDP terms last year and MDD by 4.7 per cent, a better measure of underlying activity.
The strong performance last year was driven by a surge in exports with goods exports jumping by 15.4 per cent.
Domestic activity was also boosted by a 2.6 per cent increase in consumer spending aided by the growth in real wages.
The globalised industry sector, which includes the State’s pharma sector, expanded by 11.9 per cent last year while the information and communication sector grew by 14.8 per cent.
Overall, the multinational-dominated sector expanded by 14.5 per cent in 2025, the CSO said, noting that this accounted for 50.4 per cent of “total value added in the economy”.
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There were also higher levels of economic activity for most domestically focused sectors including a 7.2 per cent expansion for the construction sector amid a pickup in homebuilding.
Real estate activities increased by 4.9 per cent while the traditional agriculture, forestry and fishing sector grew by 3.6 per cent.
The only domestic dominated sector not to post growth was the financial and insurance sector which was flat in the year.
On the expenditure side, personal spending on goods and services, a key metric, rose by 2.6 per cent in 2025, while Government spending on goods and services increased by 3.2 per cent in the year.
Export growth of 7.5 per cent was recorded while imports grew by 9.6 per cent which meant net exports went up by 2.2 per cent.
Capital investment increased by 31.5 per cent reflecting what the CSO said was higher levels of investment in intangible assets.
