Dublin, Ireland – Following a similar move by Goodbody Stockbrokers earlier this week, Bank of Ireland (BOI) has revised its economic growth projections upwards for both the domestic economy and headline Gross Domestic Product (GDP) for the coming years, citing strong export performance, particularly in the pharmaceutical sector.
BOI Lifts Growth Forecasts; Pharmaceutical Exports Offer Tariff Shield
Bank of Ireland (BOI) has significantly upgraded its outlook for the Irish economy, predicting robust growth despite global headwinds.
Key Economic Projections:
- Domestic Economy Expansion: BOI forecasts the domestic economy (Modified Domestic Demand) to expand by 3.4% this year (2025) and 2.6% in 2026.
- Headline GDP Growth: The Gross Domestic Product (GDP), which includes the significant impact of multinational corporations, is now projected to surge by 10.7% this year, a notable upward revision from the bank’s earlier forecast of 8.1%.
Export Resilience and Tariff Impact: The positive revision is largely attributed to the continued strength and relative immunity of key export sectors. Chief Economist Conal MacCoille noted that Irish exports to the US, especially pharmaceuticals, remain largely tariff-free following a recent White House deal with Pfizer (and AstraZeneca). Mr. MacCoille estimated that the new 15% tariff only affects 2% to 3% of total exports, resulting in a “minimal impact” compared to manufacturing-heavy EU economies. He added that the earlier surge in exports appeared to be new production facilities coming online, rather than just front-running tariffs.
Housing Market Outlook: The bank has maintained its forecast for housing completions at 34,500 homes for 2025, despite a slight cooling in residential construction figures recently published by the Central Statistics Office (CSO). Mr. MacCoille commented that CSO data still indicates “two to three years of apartment supply in the capital still under construction.”
House price inflation is expected to continue, with forecasts set at a 6% rise this year and 3.5% in 2026, reflecting strong underlying demand supported by a robust labour market, even as affordability becomes increasingly stretched. The CSO data showing a 4% increase in residential construction in Q3 aligns with the view of strong underlying activity, which saw 33,000 homes built in the 12 months to the end of September—the highest figure since the Celtic Tiger era.
Fiscal Vulnerability Warning: Despite the strong short-term outlook, Mr. MacCoille issued a cautionary note regarding long-term fiscal stability. He stressed that the reliance on corporate tax revenues from a small number of firms represents a significant “fiscal vulnerability,” which could necessitate “swift budgetary adjustments” in the event of a shortfall.
