Ireland should prudently manage its public finances and invest in capital projects to mitigate risks posed by potential tax changes from the Trump administration, according to an economic analysis by Goodbody Stockbrokers.
The report warns that the protectionist policies of the new US president pose "the biggest vulnerability" to the Irish economy.
Goodbody's chief economist Dermot O'Leary said Mr Trump's proposed tariffs, tax changes and incentives to move businesses back to the US could affect Ireland's "tax competitiveness and investment attractiveness".
Mr O'Leary suggested that changes in the US could be mitigated by "high levels of capital spending" in Ireland.
He also advocates that the Government runs a balanced budget excluding the tax windfalls paid by multinationals and recommends Ireland puts excess tax receipts into savings funds.
He said: "These steps will aim to ensure fiscal stability, maintain competitiveness in infrastructure and address long-term pressures on public finances."
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US multinationals are responsible for 83% of corporation tax and 10% of private sector employment in Ireland.
Mr O'Leary said Ireland runs a large goods trade surplus and a significant services trade deficit with the US.
The goods surplus is mainly driven by pharmaceutical exports.
"Under the new US administration risks are skewed to the downside, including tariffs and corporate tax changes, but there are potential upsides too from better US dynamism and increased profitability from US firms based in Ireland," he stated.
His report forecasts that the domestic Irish economy will grow by 3% this year and 2.8% in 2026.
He projects a modest increase in residential building with 34,000 homes being completed this year and almost 40,000 in 2026.
His report forecasts that wages will continue to rise by almost 5% this year.
Mr O'Leary said that the labour market is almost at full employment.
He added that the increase in female labour force participation has been driven by the shift towards remote working which has also contributed to labour market strength.
