Bank of Ireland has downgraded slightly its forecast for economic growth for 2026.
In its latest economic outlook, the bank said it now expects the economy, as measured by Gross Domestic Product (GDP), to grow by 2.8% this year, down from a previous projection of 3.1%.
GDP includes multinational activity.
Bank of Ireland is also forecasting that modified domestic demand (MMD) will grow by 2.3% this year, which is down slightly from 2.6% previously.
MDD is a better measure of domestic activity in the economy.
The bank said the downward revision for 2026 "reflects front-running of US tariffs unwinding but sees new pharma production facilities and weight loss drugs leading to a permanent upward shift in GDP."
In the report, the bank warned that "should the 60% surge in 2025 of Irish goods exports to the US fall back more aggressively, negative GDP growth can't be ruled out."
Bank of Ireland has also revised upwards its forecast for economic growth for 2025.
It said it now expects GDP to have grown by 11.2% last year, compared to a previous projection of 10.7%.
Among the other projections for the year ahead, Bank of Ireland has forecast employment will grow by 1.5%, unemployment will gradually rise towards 5%, with house prices increasing by 4%.
The Group Chief Economist at Bank of Ireland, Conall MacCoille, said the bank’s projections "point to the Irish economy easing into a more sustainable but still solid pace of growth".
He said even as employment growth moderates toward 1.5%, "momentum in construction and public investment are encouraging".
"Budget 2026 provided an important boost through higher capital spending, which will offset the impact of heightened uncertainty on investment."
Mr Mac Coille said the "geo-political uncertainties, tariffs and trade disruption, stretched equity market valuations, and threats to the Federal Reserve’s independence are just some of the external risks."
"Elevated household savings and weak business sentiment surveys suggest the uncertain environment has already weighed on spending and job creation," he added.
He said many of the risks facing Ireland may be external but "nonetheless a key concern is that competitiveness pressures and infrastructural bottlenecks may act as an ever more pressing constraint on the Irish economy."
"A key uncertainty remains the true pace of the slowdown in job creation last year, especially amongst consumer facing sectors such as retail and hospitality, likely evidence of wage-cost pressures."
Mr Mac Coille said given the uncertain outlook, "implementing the Government’s 'Accelerating Infrastructure Report and Action Plan’ will be essential for the successful rollout of the €106 billion National Development Plan".
