Ireland's gross domestic product (GDP) is forecast to grow exceptionally by 10.7% in 2025, mainly due to strong export activity in the first half of the year, the European Commission said in its Autumn 2025 Economic Forecast today.
As the frontloading of exports effect unwinds, growth is expected to moderate to 0.2% in 2026, reflecting a technical base effect from 2025 dynamics, before stabilising at 2.9% in 2027, the EU said.
Inflation is projected to remain contained, while the labour market is expected to continue expanding, it added.
Today's report also said the outlook for public finances is positive but marked by significant risks to corporation tax revenues.
Meanwhile, the euro zone economy will grow faster than earlier expected in 2025, the European Commission also forecast today, mainly thanks to a surge in exports in the first half of the year ahead of expected tariff increases.
The EU executive arm said gross domestic product in the 20 countries that share the euro currency would grow 1.3% this year, rather than 0.9% as forecast last April, and up from 0.9% growth in 2024.
But growth is to slow marginally to 1.2% in 2026, a downward revision of the Commission's own 1.4% forecast from April, before accelerating again to 1.4% growth in 2027.
"Initially fuelled by a surge in exports in anticipation of tariff increases, the steady - albeit modest -growth observed so far highlights the resilience of the EU economy in the face of a challenging external environment," the Commission said.
"Inflation is nearing the ECB target, and financing conditions have improved," the forecast said.
Consumer price growth in the euro zone is to slow to 2.1% in 2025 and 1.9% in 2026 from 2.4% last year, the Commission said.
But despite the faster growth, public finances are to deteriorate, with the euro zone aggregated budget deficit rising to 3.2% of GDP this year from 3.1% last year and expanding further to 3.3% in 2026 and 3.4% in 2027.
Aggregated euro zone public debt is also to increase, the Commission said, going up to 88.8% of GDP this year from 88.1% in 2024 and then to 89.8% in 2026 and 90.4% in 2027.
The budget deficit of the euro zone's biggest economy Germany is to jump to 4% of GDP next year from 3.1% this year and 2.7% in 2024, mainly as a result of higher defence spending.
The second biggest euro zone economy France is expected to cut it budget gap to 5.5% of GDP this year from 5.8% in 2024 despite its government crisis, the Commission forecast. The French budget gap is to fall to 4.9% in 2026, it forecast.
