Ireland’s domestic economy is expected to record modest but steady growth over the next ten years, according to a new projection from the Economic and Social Research Institute. The research suggests annual growth of slightly over 2%, pointing to a period of stability rather than rapid expansion.

The study assesses how the Irish economy may perform under normal conditions, while also examining its exposure to potential external shocks. It notes that Ireland has shown resilience in recent years, having navigated the economic disruption caused by Brexit, the Covid-19 pandemic and sharp increases in energy prices. However, the report cautions that this resilience should not be taken for granted.

A key concern highlighted is Ireland’s exposure to global economic conditions. The ESRI points to heightened uncertainty arising from changes in US trade policy and a more challenging international economic environment. Ireland’s heavy reliance on multinational companies, both for employment and for corporation tax receipts, is identified as a central vulnerability within the current economic model.

Under its baseline assumptions, the domestic economy is projected to grow by an average of 2.3% per year up to 2030, easing slightly to 2.1% per year in the period to 2035. The ESRI stresses that this outlook is not a forecast, but a projection that excludes the impact of unforeseen shocks.

The report explores several alternative scenarios to illustrate potential risks. In the event of a global slowdown, a 5% reduction in export demand for Irish goods and services could lead to a 3.2% fall in national income and a significant decline in consumer spending by the end of the decade. A deterioration in competitiveness could have even more severe consequences, with notable reductions in incomes and household expenditure.

The analysis also considers the impact of reduced foreign direct investment. In such a scenario, employment levels could fall materially, with a corresponding rise in unemployment. On a more positive note, the study finds that stronger productivity growth could meaningfully improve economic outcomes, lifting national income above the baseline projection.

Commenting on the findings, ESRI Director Martina Lawless described the outlook as one of continued growth, though at a slower and more moderate pace. She also warned that longer-term pressures, including an ageing population and the financial demands of climate change, are likely to weigh on the economy beyond 2035.

The report concludes that sustained investment in education, infrastructure, and research and development will be essential to reduce risk exposure and support long-term economic resilience.

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