IMF Wraps 2025 Article IV Review With Ireland
Washington, DC: On June 6, 2025, the Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Ireland. [1]
The Irish economy has performed well. The domestic economy, as measured by the Modified Gross National Income, is estimated to have grown by about 4 percent in 2024. Robust consumption and strong net exports, dominated by foreign multinational enterprises (MNEs), contributed positively to growth. Headline inflation has fallen to target, while service inflation has been more persistent. The labor market remains tight, although pressures appear to be easing. The general government balance continued to register a sizeable surplus in 2024, supported by large corporate income tax receipts from multinational enterprises. Bank lending growth has strengthened, largely driven by housing and consumer loans.
The domestic economy is projected to continue to grow, though at a slower pace in a highly uncertain global environment. The strong labor market and rising real incomes, as well as anticipated pick up in housing investment and government capital spending would support domestic demand. While the direct effect of the announced tariff measures is projected to be contained, heightened global uncertainty would though weigh on household and business spending decisions.
There are significant downside risks to the growth outlook. The concentration of activity in a small number of MNEs leaves the economy and public finances vulnerable to external trade and tax policy shifts and firm- or sector-specific shocks. More broadly, a sustained reversal of globalization would put at risk the Irish economic model which has benefitted from free trade and capital flows. Domestically, supply-side constraints could delay the attainment of infrastructure and housing goals.
Executive Board Assessment [2]
Executive Directors welcomed the strong economic performance, which has been underpinned by robust domestic demand and prudent policies. Directors highlighted that while the outlook remains positive, there are considerable downside risks, given high global uncertainty and Ireland’s significant exposure to trade and investment shocks. Accordingly, Directors emphasized the need to maintain fiscal prudence, safeguard financial stability, and advance structural reforms to support resilience and growth.
Directors recommended that fiscal policy continue to focus on building buffers, stepping up public investment, and reducing revenue uncertainty. Noting that the economy is operating at full capacity, Directors agreed that a broadly neutral fiscal stance with increased capital expenditure is appropriate as it would allow Ireland to address infrastructure needs without adding to aggregate demand. Important measures include enhancing public spending efficiency and broadening the tax base to reduce reliance on uncertain corporate tax revenue. Directors agreed that Ireland would benefit from a strengthened national fiscal framework that further ensures long-term fiscal sustainability and enhances the credibility and predictability of fiscal policy.
Directors recognized the resilience of the financial sector, while underscoring the importance of continued close monitoring of financial stability risks. Noting the high global uncertainty, Directors emphasized the need for continued vigilance, as shocks to the non-bank sector could be transmitted to other parts of the financial system and the real economy. Directors agreed that the macroprudential stance is appropriate and that measures should continue to be reassessed as conditions evolve. While welcoming progress on reducing risks from the non-bank sector, Directors urged continued efforts to improve regulation and supervision and address data gaps in collaboration with international regulators and other jurisdictions.
Directors emphasized the importance of enhancing resilience and competitiveness, amid external policy shifts and deepening geoeconomic fragmentation. Measures to promote linkages between domestic and multinational firms in innovation cooperation and improve infrastructure would help foster increased competitiveness. Directors also encouraged continued engagement in the EU to further strengthen the single market. Noting the potential dividends for growth, Directors acknowledged that Ireland is well-positioned to harness the benefits of digitalization and AI. They also highlighted the need to address supply-side constraints in housing, including by boosting productivity in the construction sector and enhancing housing policy certainty.
[1] Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
[2] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .
https://www.imf.org/en/News/Articles/2025/06/10/pr25189-ireland-imf-executive-board-concludes-2025-article-iv-consultation-with-ireland