The Department of Finance and the Department of Public Expenditure and Reform have jointly published the Annual Progress Report 2025 which incorporates the Department of Finance’s spring forecast. The report is a European legal requirement which assesses progress on the implementation of the Government’s Medium-Term Fiscal and Structural Plan. It replaces the annual Stability Programme Updates and the annual National Reform Programme in the EU budgetary cycle.
The report outlines that Modified Domestic Demand (MDD) is projected to expand by 2.5 percent in 2025 and 2.75 percent next year, both of which are downward revisions compared to the autumn forecasts. The projections are prepared on the assumption that transatlantic tariffs will not be introduced and forecast a general government surplus of €8.7 billion.
In an alternative scenario, which incorporates the likely economic impacts of the tariffs that are now in place, projected MDD growth is lowered to just over 2 percent this year and 1.75 percent next year.
The report notes that while the economy, in aggregate terms, is undoubtedly in a strong position at present, the near-term outlook for the Irish economy is clouded in considerable uncertainty. Uncertainty in terms of trade policy, financial and commodity market developments, geopolitics and macroeconomic policies are noted as the dominant features of Irish and global economies. Navigating the challenging external environment is identified as a key priority by this Government.
Commenting on the publication, Minister for Finance, Paschal Donohoe said:
“The more contested and fragmented world that is now taking shape represents a serious headwind for the Irish economy which has benefited so much from the rules-based, multilateral trade system.
Given the elevated level of uncertainty, it is important to stress that our assessment published today is more akin to a scenario analysis; my officials will, of course, continue to monitor incoming data and developments and update numbers accordingly.”
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