About the NTMA
Business Areas

Irish Economy and Public Finances

March 2025

  • Macroeconomic outlook
      • Thus far in 2025, the Irish economy shows continuing signs of growth in the face of increased global uncertainty. The domestic economy continues to grow at around 2-3% with the economy at full employment.
      • Following a fall in GDP of 5.5% in 2023, provisional national accounts estimates from the CSO indicate that GDP grew by 1.2% in 2024. The last few years have highlighted the unique structure of the Irish economy. Ireland has a standard domestic retail/services economy which is augmented by a highly productive and fast-growing multinational sector. The two-speed nature of the Irish economy means that volatility can be expected in the usual measures of economic activity.
      • Given that Irish GDP is distorted by the presence of multinationals, Modified Domestic Demand (MDD) is a more accurate measure of underlying domestic growth. Final MDD was up by 2.6% in 2023 and preliminary data shows growth of 2.7% in 2024. This growth in the domestic economy is largely driven by positive trends in the labour market and in personal consumption, as well as modified investment.
      • The labour market remains strong, with an unemployment rate of 3.9% in February. The labour force grew by 2.4% in in the 12 months to Q4 2024 and the employment rate increased by 2.6% in the same period. This is partially driven by the continued increase in the female labour force participation rate, which hit a record high of 61.6% in Q3 2024. Highlighting the consistency of the labour market, the unemployment rate has been below 5% since February 2022.
      • Headline inflation was 1.4% in the twelve months to February 2025, a slight decrease from 1.7% year on year in January, but largely continuing the rebounding trend since the recent low of 0.0% (YoY) in September 2024. This is in line with the Department of Finance forecast for inflation to stabilise at 2.0% in the coming years, following the drop from peak levels of 9.6% in 2022. Prices continue to impact consumer spending, which grew by 2.3% in 2024, following 4.8% in 2023.
      • The rising cost of living is partially offset by the improvement in household balance sheets seen over the past three years. Despite the impact of Covid, Ireland had used the last ten years to repair private sector balance sheets. From 2014-2023, disposable income expanded in aggregate and debt levels declined. In 2012, the debt-to-income ratio for Irish households was around 200%. In 2023, this was down below 100%.
      • Modified investment continues to demonstrate some volatility. Following a decrease of 4.4% in 2023, it has rebounded to 2.2% in 2024 (according to provisional national accounts figures). As housing completions have slowed in 2024 relative to 2023, the increase in modified investment was largely driven by growth in domestic intangible assets.
      • The domestic facing sectors of the economy grew by 2.1% in 2024, as measured by GVA. Professional, admin and support services grew by 5.6% and distribution, transport, hotels, and restaurants grew by 1.4%. The construction sector contracted by 1.8%, likely due to continuing building materials inflation as well as a readjustment to a higher interest rate environment.
      • Multinational sectors including Industry (which is Pharma dominated) and ICT performed exceptionally during Covid and the years following. Following growth rates of 22.8% and 22.2% in 2020 and 2021 respectively, GVA in the foreign-owned MNE sector contracted by 16.2% in 2023. There is some evidence of a rebound in 2024, with provisional figures showing a decline of just 0.9%. One key factor is the fall-off of pharmaceutical manufacturing following Covid-19. While ICT grew by 8.4% in 2024, Industry declined by 5.1%.
      • Increased global economic uncertainty and the rising threat of tariffs have been prevalent themes in the first quarter of 2025. The importance of Ireland’s trade relationship with the US is demonstrated by the role of US multinationals in the Irish economy. In 2023, the US accounted for 28% of goods exports and 48% of services imports, highlighting the structure of transatlantic goods and services flows.
      • Potentially in anticipation of tariffs, early 2025 data suggests an increase in exports to the US. January 2025 saw an 81.4% increase in goods exports to the US and a 28% increase in goods exports overall, largely dominated by pharmaceutical products.
      • While this has positive implications for growth in the short term, it demonstrated exposure to the effects of possible tariffs. The Central Bank’s March Quarterly Bulletin modestly revised downward MDD growth for 2025 and 2026 (at 2.7% and 2.5% respectively).
  • Key Economic Figures

    • 2023

      2024P

      2025F

      2026F

      2027F

      2028F

      Consumer spending (% chg vol)

      4.8

      2.3

      3.3

      2.9

      2.7

      2.6

      Government spending (% chg vol)

      4.3

      4.3

      2.8

      1.8

      1.7

      1.7

      Modified Investment (% chg vol)

      -4.4

      2.2

      1.9

      4.8

      4.9

      4.6

      Exports (% chg vol)

      -5.8

      11.7

      1.9

      3.8

      3.8

      3.7

      GDP (% chg vol)

      -5.5

      1.2

      3.9

      3.7

      3.7

      3.6

      Modified Domestic Demand (% chg vol)

      2.6

      2.7

      2.9

      3.0

      2.9

      2.8

      Nominal GNI* (%chg vol)

      290.9

      314.4

      331.1

      348.3

      365.8

      383.6

      Nominal GDP (€bn)

      510.0

      533.4

      557.3

      590.3

      625.1

      661.6

      Employment (% chg)

      3.4

      2.2

      1.8

      1.5

      1.2

      0.9

      Unemployment rate (% labour force)

      4.3

      4.3

      4.5

      4.5

      4.5

      4.5

      HICP (% chg yoy)

      5.2

      1.3

      1.9

      2.0

      2.0

      2.0

      GDP Deflator (% chg yoy)

      3.6

      3.2

      2.1

      2.1

      2.1

      2.1

      General Government Balance (€bn)

      8.3

      22.6

      9.7

      8.3

      7.1

      10.3

      General Government Balance (% GNI*)

      2.9

      7.3

      2.9

      2.4

      1.9

      2.7

      Primary Government Balance (% GNI*)

      4.1

      8.5

      4.0

      3.3

      3.0

      3.8

      General Government Debt (€bn)

      220.7

      221.8

      211.2

      212.5

      217.8

      224.8

      General Government Debt (% GDP)

      43.3

      41.6

      37.9

      36.0

      34.8

      34.0

      General Government Debt (% GNI*)

      76.1

      71.9

      63.8

      61.0

      59.5

      58.6

      Average interest rate on stock of GG debt

      1.6

      1.4

      1.6

      1.6

      1.8

      1.9


      Source: CSO, CBI, Department of Finance (Budget 2025)

  • Annual Public Finances
      • In 2024 the General Government Balance (GGB) was 7.3% of GNI* (CBI estimate). However, this headline figure is skewed by the inclusion of the €14bn from the CJEU ruling (See below). The Department of Finance forecasts the GGB to be 2.9% of GNI* in 2025 and 2.4% in 2026.
      • Outside of the CJEU revenues, Corporate Tax receipts continue to be a significant driver of government surpluses. Corporate Tax revenues have more than doubled since 2020 and came in at €28.1bn in 2024, an increase of 17.9% on 2023 (excluding CJEU receipts). It is clear that Ireland’s corporate tax receipts are heavily concentrated, and some amount may be “windfall” or “transitory” in nature. When the Department of Finance’s estimate of these “windfall” receipts are excluded from GGB, the Government ran an estimated underlying deficit of €7.7bn (-2.5% GNI*) in 2024.
      • Outside of these “windfall” and once-off elements, there has been continued increase in both tax revenue and expenditures. In addition to increased Corporation Tax revenues, both income tax and VAT increased by 6.6% and 7.3% respectively in 2024. These increases indicate that growth is supported by continued strength in consumption and in the labour market.
      • Due to this fortunate position (albeit one which is highly concentrated on Corporation Tax), the Government has announced two new long-term investment funds - the Future Ireland Fund (FIF) and the Infrastructure, Climate and Nature Fund (ICNF). The aim is to ring-fence strong, but volatile corporate tax receipts to help alleviate spending pressures in the future. The FIF will be used to meet the Exchequer costs in the decades to come such as an ageing population and the digital and climate transitions. Each year 0.8% of GDP will be transfer to the FIF (€4-€6bn per annum). The fund was seeded with €4bn from the National Reserve Fund and following last year’s contribution, just over €8bn sits in the FIF.
      • The ICNF was seeded with €2bn from the National Reserve Fund and will be capitalised with €2bn a year from 2025 to 2030. The fund will be more counter-cyclical and will ensure future Government’s ability to continue capital spending even during an economic downturn. It will also have a climate and nature component to help achieve carbon budgets through capital projects if carbon targets are unmet.
      • In September 2024, the Court of Justice of the European Union (CJEU) ruled on the Apple State aid case. The CJEU set aside the judgement of the General Court and gave a final judgment in the matter. The CJEU confirmed the Commission’s decision that Ireland granted state aid. As the Government have stated, the case involved an issue that is now of historical relevance only; the Revenue opinions date back to 1991 and 2007 and are no longer in force. Ireland will respect the findings of the CJEU regarding the tax due in this case. The process of transferring the assets (c. €14bn) in the Escrow Fund to Ireland has taken place. In his Budget Speech, the Minister for Finance outlined the Government’s intention to use the funds for long term infrastructure spending. As stated previously, the NTMA has not included these funds in any of its issuance plans.
      • The NTMA has announced its plan to issue €6-10 billion in bonds over the course of 2025. At end March €4 billion has been raised.
      • Following rapid growth in the last decade, Ireland has seen its debt sustainability metrics improved dramatically. Ireland’s expected debt-to-GDP ratio of 41.6% in 2024 is down relative to a pre-Covid debt ratio of 57%.
      • However, given the long-standing GDP distortions, Debt-to-GNI* is a more appropriate metric for evaluating Ireland’s debt sustainability. It has fallen from close to 170% in 2013 to c. 69% in 2024. The Central Bank forecasts this to fall further to 65.4% in 2025. At the same time, the weighted maturity of the debt stands above 10 years - one of the longest in Europe. Ireland’s annual interest costs have fallen for a number of years and is estimated at approximately €3.1bn in 2024.
      • The GDP denominator issue means that other metrics of debt serviceability are required. Debt-to-GG Revenue (145.8% 2024f) and interest as a percentage of revenue (2.1% 2024f) are more apt measures for comparison with other sovereigns regarding Ireland’s debt serviceability.
      • It should be noted however that Debt-to-GNI* is not a perfect metric for Ireland’s ability to repay debt. GNI* excludes certain activities that the Irish State could possibly tax and hence excludes some part of its ability to repay. It is fair to say the reality of Ireland’s “true” debt ratio is somewhere in between Debt-to-GNI* and Debt-to-GDP.
  • Key Annual Public Finance Figures

    • Description

      European
      System of
      Accounts
      (ESA)
      Code

      2023

      2024F

      2025F

      2026F

      2027F

      2028F

      €bn

      €bn

      €bn

      €bn

      €bn

      €bn

      Revenue

      Taxes on production and imports

      D.2

      33.0

      34.6

      36.6

      38.0

      39.5

      41.5

      Current taxes on income, wealth

      D.5

      59.9

      67.8

      69.2

      72.0

      73.7

      79.4

      Capital taxes

      D.91

      0.6

      0.6

      0.6

      0.6

      0.7

      0.7

      Social contributions

      D.61

      21.6

      22.7

      25.5

      27.5

      29.5

      32.0

      Property Income

      D.4

      2.0

      2.0

      2.0

      2.0

      2.2

      2.4

      Other

      6.6

      21.2

      7.1

      7.2

      7.3

      7.6

      Total revenue

      TR

      123.7

      149.0

      141.0

      147.3

      152.9

      163.6

      Expenditure

      Compensation of employees

      D.1

      31.1

      34.5

      36.5

      38.5

      40.2

      41.9

      Intermediate consumption

      P.2

      19.0

      19.4

      19.6

      20.9

      22.1

      22.8

      Social payments

      D.6

      39.8

      44.2

      44.7

      46.7

      48.6

      50.4

      Interest expenditure

      EDP_D.41

      3.5

      3.1

      3.5

      3.3

      3.8

      4.2

      Subsidies

      D.3

      2.5

      2.4

      2.4

      2.4

      2.5

      2.5

      Gross fixed capital formation

      P.51

      11.8

      13.3

      16.1

      17.5

      18.5

      20.7

      Capital transfers

      D.9

      2.2

      2.5

      3.0

      3.1

      3.0

      3.0

      Other

      5.5

      6.0

      5.5

      6.5

      7.1

      7.8

      Total expenditure

      TE

      115.4

      125.3

      131.3

      138.9

      145.8

      153.3

      General Government Balance (GGB)

      B.9=TR-TE

      8.3

      23.7

      9.7

      8.3

      7.1

      10.3

      GGB as % of GNI*

      2.9%

      7.5%

      2.9%

      2.4%

      1.9%

      2.7%

      Underlying GGB (excl. CT windfalls) €bn

      -2.9

      -6.3

      -5.7

      -7.0

      -7.1

      -6.9

      Primary Balance (PB) €bn

      11.8

      26.8

      13.2

      11.6

      10.9

      14.6

      Primary Balance as % of GNI*

      4.1%

      8.5%

      4.0%

      3.3%

      3.0%

      3.8%


      Source: Department of Finance Budget 2025

  • National Accounts Distortions
      • From 2015 onwards, Ireland’s national accounts are distorted by the reclassification of multinational companies and their assets as being resident in Ireland. Given the presence of such large distortions, GDP, GNP and even GNI have less information content when it comes to understanding Ireland’s “true” economic activity. That is, to understand the wealth and income generating capability of the Irish people we need to look to other metrics.
      • The reclassification of multinational companies’ activity as Ireland expanded the capital stock by c. €0.7trn over the course of 2015-2022. In some cases, whole companies re-domiciled in Ireland while in other cases multinationals moved assets (mostly intangibles) to their Irish-based subsidiary. The goods and services produced by the additional capital are mainly exported. This resulted in a step change in net exports in 2015 and the large year-on-year increases in net exports since.
      • Often the goods produced using the intangible assets based in Ireland are produced through “contract manufacturing”. This is where an Irish based company contracts out manufacturing to another company (typically outside of Ireland). The result of contract manufacturing is a goods export is recorded in the Irish Balance of Payments even though it was never produced in Ireland. There is little or no employment effect in Ireland from this contract manufacturing.
      • Contract manufacturing (CM) has occurred in Ireland prior to 2015 but did not have a significant net impact on GDP since the company engaged in CM would send royalties back to its parent as a royalty import. However now that the parent/intangible asset is here, there is no royalty import and Ireland’s GDP is artificially inflated. This scale of contract manufacturing is unprecedented.
      • But not all intangible assets in Ireland are utilised like this. On the services side, large amounts of intellectual property are now based in Ireland, mostly relating to companies in the ICT sector. Accordingly, we have seen Computer Services exports increase dramatically. Theses exports are booked as Irish as are the resulting profits. Such profits are repatriated in time and should not be considered income for Irish households.
      • Complicating matters further, there are subsidiary companies who exports computer services out of Ireland but also pay royalties back to parent companies (a royalty import). These flows will offset mostly but will push up both imports and exports in Ireland balance of payments.
      • Lastly, the presence of aircraft leasing companies and redomiciled PLCs in Ireland can skew the national account figures to a smaller but still significant amount. In adjusting for globalisation effects, these distortions need to be considered.
      • The upshot of all of this is that Ireland’s investment, exports and imports are heavily skewed by multinational companies’ activity. However, there is clearly real activity occurring in Ireland. Employment in multinational sectors has increased dramatically and make up 12% of employment, and 19% of the country’s wage bill. Lastly, the corporate tax paid in Ireland from these companies has grown exceptionally strongly.
      • In response to the distortions, the CSO have worked to provide indicators and detailed datasets that give a better understanding of Ireland’s highly globalised economy. New supplementary indicators include one closely related to Gross National Income (known as GNI*) and another is a modified version of domestic demand (MDD).
      • For GNI*, Gross National Income is stripped of the profits of redomiciled companies, depreciation on R&D/ IP assets and depreciation on aircraft leasing. On a nominal basis, GNI* amounted to €291bn in 2023 compared with €510bn for Gross Domestic Product (GDP).
      • Of note, GNI* rose by a significant 9.0% in nominal terms from 2022 to 2023. Adjusting for prices, GNI* grew by 5.0% in 2023 and is forecast to grow by a similar 4.9% in 2024. This highlights how volatile the Irish National Accounts can be and how there is a need for a suite of indicators to best capture trends.
      • Modified final domestic demand (MDD for short) is proving to be a useful metric but one with its own limitations. This measure is domestically focused and is constructed to be less affected by the activities of multinational companies. The measure includes private consumption, government consumption and a modified metric for investment. Importantly, MDD ignores the net exports channel altogether where much of the distortions occur. The downside here is that domestic net exports is ignored too. A plus point for MDD is that it is released quarterly (versus the annual GNI* release). It can thus give us a more-timely gauge of the real economy.
      • MDD (which excludes inventories) fell in real terms by 5.7% from 2019 to 2020 but rebounded to grow by 8.8% from 2021 to 2022. Growth in 2024 was more modest at 2.7%.
  • National Accounts Distortions - Data Table

    • National Account – Current Prices (€ bn)

      2018

      2019

      2020

      2021

      2022

      20231

      Gross Domestic Product (GDP)

      335

      364

      382

      449

      521

      510

      minus Net Factor Income

      -82

      -90

      -104

      -129

      -165

      -122

      = Gross National Product (GNP)

      253

      273

      278

      320

      356

      388

      add EU subsidies minus EU taxes

      1.1

      1.1

      1.1

      0.8

      0.7

      0.3

      = Gross National Income (GNI)

      254

      274

      280

      321

      357

      388

      minus factor income of re-domiciled companies

      -5

      -5

      -4

      -10

      -4

      -8

      minus depreciation on foreign owned IP assets

      -48

      -53

      -67

      -70

      -75

      -78

      minus depreciation on aircraft leasing

      -9

      -10

      -10

      -10

      -10

      -11

      = Nominal GNI*

      192

      207

      198

      231

      267

      291

      GNI* (y-o-y growth)

      7.8

      -4.1

      16.3

      15.7

      9.0

      Real GNI*

      225

      230

      224

      255

      267

      280

      Real GNI* (y-o-y growth)

      2.2

      -2.8

      13.9

      4.6

      5.0

      1 Preliminary results