Ireland's economy is forecast to be the fastest growing of the world's most advanced economies this year.
The projection is contained in the International Monetary Fund's latest World Economic Outlook, which was published today.
The IMF said it expects Gross Domestic Product, which includes the impact of multinationals, to grow by 9.1% in 2025, which is up from the fund's forecast of growth of 2.3% in April.
The figure is below the Department of Finance's GDP growth forecast of 10.8% in the Budget.
The WEO report points to a surge in exports of pharmaceutical products during the first quarter of the year for the revised projections, which it said has also contributed to a slight increase in the growth forecast for the eurozone this year of 1.2%.
The IMF said Ireland had "disproportionately contributed to euro area growth in the first quarter, with export performance driven by pharmaceutical sector transactions, partly as a result of front-loading" ahead of the introduction of US tariffs.
However, it has revised downwards its projection for economic growth in Ireland next year, from 2.1% in April, to 1.3%.
The IMF figure is above the Government's forecast of 1% GDP growth in 2026.
The economic outlook from the Washington-based organisation projects that inflation in Ireland will average at 1.7% this year, with a similar figure for 2026.
And the IMF expects employment levels here will remain strong, with unemployment forecast to remain low at 4.6% this year and next.
IMF ups global growth forecast on 'modest' US trade shock
The IMF lifted its outlook for global growth this year, flagging a milder than expected economic hit from US President Donald Trump's tariff policies while warning of risks ahead.
In its flagship WEO report - compiled before the most recent US-China tariff spat - the IMF hiked its 2025 global growth forecast to 3.2%, up from 3% in July, while leaving its prediction for 2026 unchanged at 3.1%.
"The good news is that growth impact of the trade shock is modest so far," IMF chief economist Pierre-Olivier Gourinchas told reporters ahead of the publication of the WEO, adding that the private sector had also supported growth by responding to Trump's tariffs in an agile way.
Other factors, including the AI boom and fiscal policies in Europe and China had also helped to prop up the global economy, he said, while warning that the IMF still saw downside risks to growth from the trade uncertainty.
Since returning to office, Mr Trump has imposed sweeping tariffs on top trading partners including China and the European Union in a bid to reshape US trading relationships and boost domestic manufacturing.
Over the weekend, the US president threatened fresh tariffs of 100% on China, on top of current steep levies, criticising Beijing's recent decision to tighten export controls on the rare earth minerals crucial to the defense and high tech sectors.
"Everything is very fluid," Mr Gourinchas said. "But I think it's a very useful reminder that we live in a world in which this kind of increase in trade tensions, increase in policy uncertainty, can flare up at any time."
The IMF expects the global inflation rate to remain elevated at 4.2% this year and 3.7% in 2026, underpinned by elevated inflation in several countries including the US.
US upgraded, China unchanged
The IMF raised its prospects for economic growth for the world's largest economy by 0.1% this year and next, to 2% in 2025, and to 2.1% in 2026.
However, this still represents a marked slowdown from 2024, when US growth hit 2.8%.
Despite the trade tensions between the world's two biggest economies, the Fund still expects China's economy to slow to 4.8% this year from 5% in 2024, before cooling sharply to just 4.2% in 2026, in line with previous estimates.
China slowdown has been driven by a reduction in net exports which have been at least partly offset by growing domestic demand fueled by "policy stimulus," the Fund said.
Elsewhere in Asia, the IMF raised India's 2025 growth forecast to 6.6% from 6.4% in the last outlook update in July, and hiked its prediction for growth in Japan to 1.1% - up 0.4 of a percentage point.
Europe's growth troubles continue
The outlook for Europe has improved slightly from July, with the euro zone now expected to grow by 1.2% this year and by 1.1% in 2026.
While this reflects a slight increase from last year, it remains well below the strong growth seen in the US, underscoring the enduring challenges faced by some of Europe's largest economies.
Germany's economy is expected to bounce back from recession to register growth of 0.2% this year, up 0.1 percentage point, before picking up to 0.9% next year.
France, which is in the midst of a prolonged political crisis, is expected to see growth cool to 0.7% this year, before rising slightly to 0.9% in 2026.
The one market exception in the euro zone is Spain, which saw an upgrade and is now expected to see growth remain resilient at 2.9% this year and 2% in 2026.
Growth in the UK is now expected hit 1.3% this year and next.
As the war in Ukraine continues, the Russian economy is likely to see a marked slowdown in growth this year to just 0.6% this year from 4.3% in 2024, the IMF said, cutting its outlook by 0.4 percentage point.
Additional reporting AFP
