Irish business confidence has fallen to 54%, the lowest level since the covid-19 pandemic, and down from 81% at the start of last year.
The latest Grant Thornton International Business Report (IBR) highlights a significant deterioration in sentiment over the past year.
It highlights that Irish firms are grappling with increasing global uncertainty and rising cost pressures.
By contrast global business optimism currently stands at 74%, representing a 2% year-on-year decline.
The findings underscore the more pronounced challenges faced by Irish businesses.
Speaking on RTÉ's Morning Ireland, Grant Thornton Partner and Head of Global Industry Martin Shanahan said the data shows two areas feeding into the sharp fall in business sentiment.
"One is global volatility, mid-market businesses are looking at what's happening across the globe and and the impact that might have," said Mr Shanahan.
"The second s the cost of doing business, specifically businesses have identified two areas amongst many which they are concerned about, one is labour costs and the second is energy costs," he said.
He said this is important because senior executives in these firms believe their revenue for the coming year is going to be lower than expected, and that they need to hire less people in the coming year.
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"They're planning their businesses around lower expectations, but they're not sitting on their hands they are planning to do things to address this, to be more competitive," said Mr Shanahan.
"We see them trimming their costs in certain areas, but still investing in things that they think will drive long-term productivity, and particularly we see that over half of them plan to invest in technology in order to drive productivity in their businesses," he explained.
Yesterday's preliminary CSO stats showed booming export figures rose by 16.4% to a record level of €260.3 billion last year, while the value of imports also rose in 2025 by 7% to €144 billion.
How then does this strong economic performance tally with weaker sentiment?
Mr Shanahan outlined how these and IDA and Enterprise Ireland figres are all very strong, but they are backward looking and have already happened.
"These businesses are looking forward and they're looking at what they might expect over the coming year," he said.
"Things may be better than they expect and they may find as the year progresses that actually things are not as bad and some of the global volatility may settle down, but they may also find that some of the challenges that have been persistent in Ireland itself may continue," he warned.
The International Business Report is a survey of mid-market companies, offering insights from 14,000 businesses annually across 35 countries - including 102 in Ireland.
The latest research highlighted that the decline in economic optimism among Irish firms is mirrored across a range of key business indicators.
It found confidence in projected revenue growth in the next year among Irish businesses has shrunk from 79% to 59% over the last three months (Q3 2025 vs Q4 2025.)
Similarly,the study showed that expectations for increasing headcount over the next 12 months have also weakened, dropping from 59% to 46% over the same period.
