Ongoing volatility in the multinational sector related to US tariffs saw the Irish economy contract marginally in the third quarter. Preliminary figures from the Central Statistics Office (CSO) indicated the economy shrank by 0.1 per cent between July and September of this year compared to the second quarter of the year.
“The small decrease was mainly driven by contraction in the multinational dominated ‘industry’ sector in Q3 2025,” the agency said.
The industry sector here is dominated by pharmaceutical multinationals, which had fast-tracked product into the US earlier this year ahead of tariffs triggering a surge in exports and GDP.
This trend has subsequently dissipated. Nonetheless GDP on an annual basis is estimated to have risen by 10.5 per cent when compared with the third quarter of 2024.
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“While early GDP estimates for Ireland are volatile and liable to revision when full details become available, the flash for Q3 2025 is in the expected direction,” EY Ireland chief economist Loretta O’Sullivan said.
“The soft quarter-on-quarter reading reflects a slowdown in the multinational-dominated industrial sector and comes as no great surprise,” she said.
“US tariff front-running by pharmaceutical companies boosted exports and GDP earlier in the year, but this activity is now unwinding. It’s clear the domestic economy is holding its own, with today’s retail sales data pointing to solid consumer spending in September,” Ms O’Sullivan said.
The Department of Finance is expecting GDP to grow by almost 11 per cent in 2025, principally on the back of that surge in multinational exports earlier in the year. That is expected to make Ireland the fastest-growing advanced economy in the world.
The department has, however, cautioned that the front-loading of exports has introduced “significant noise into the macroeconomic data”.
Some €58 billion of €73 billion worth of Irish goods shipped to the US last year were pharma-related, which, for now, remain outside of the scope of US tariffs, shielding the Irish economy from the potential trade hit.
Minister for Finance Paschal Donohoe warns against using GDP as a gauge of economic growth here because it is distorted by foreign multinationals, despite the fact that it continues to be used to calculate the Republic’s share of activity across the euro zone.
The department expects modified domestic demand (MDD), a more accurate measure of underlying activity which weeds out distortionary flows related to multinationals, to grow by 3.3 per cent this year and by 2.5 per cent next year.
