GDP growth grows at softest pace since Q2 2024 in the first quarter

GDP reading: According to a preliminary reading, GDP growth moderated to 3.2% on a seasonally adjusted quarter on quarter basis in the first quarter, from 3.6% in the fourth quarter of last year and marking worst result since Q2 2024. Still, the reading remained strong compared to other Euro area countries On an annual basis, economic growth gathered steam, rising to 13.3% in Q1, following the previous quarter's 9.2% growth and marking the best result since Q4 2021.

Drivers: According to the statistical office, quarterly GDP growth was largely driven by the multinational sector. Exports were likely boosted by front-loading ahead of U.S. tariffs; Irish shipments to the country skyrocketed 211% year on year in February. With U.S. firms now having built their stockpiles, export growth is likely to wane from Q2 onward, in turn depressing GDP growth. Our panelists expect GDP to contract in both Q2 and Q3, and expand only weakly in Q4. The main downside risk to the outlook is a “reciprocal” 20% tariff on EU—and therefore Irish—goods, which are paused until 9 July, and a potential 25% U.S. levy on imports of pharmaceuticals, one of Ireland’s most important sectors.

Panelist insight: On the potential pharmaceutical tariffs, EIU analysts said: “The multinational sector makes up more than 50% of Irish GDP, and Ireland relies on revenue from it to support its fiscal balance […]. The country is highly vulnerable to a protectionist shift in US trade policy, owing to its high trade connection in particular in the pharmaceutical industry.”

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