Ireland's boomtown blues: Economic fears in a shifting landscape
Ireland, dubbed the "Celtic Tiger" 30 years ago by one economist, now fears a slowdown triggered by American tariffs. The rapid economic boom of the 1990s has left no trace; instead, problems often force expatriates to return to their home countries.
The Central Bank of Ireland has revised its forecasts for the national economy for the worse. According to a report published on Wednesday, the growth of domestic demand (the sum of expenditures on consumption and real investment—the preferred indicator for analysing the Irish economy) is expected to be 2.7% in 2025 and 2.4% in 2026.
Ireland particularly vulnerable to the effects of trade wars
The reason for the revision is the risk of a trade war. The effects of Donald Trump's decisions could have a particularly significant impact on Ireland because the country's economy is heavily reliant on American corporations. These have their European headquarters in Dublin for tax reasons. We are talking about giants such as Pfizer, Eli Lilly, Microsoft, and Google.
This dependence is evident in the data. Last year, Ireland exported goods worth £63 billion to the USA, an increase of 34% compared to the previous year. This results in a trade surplus in goods of £43 billion, putting the country on par with Germany in this respect.
The Irish Prime Minister Micheál Martin, during a recent visit to the White House, tried to present trade relations with the USA as beneficial for Washington. "The Irish-U.S. trade relationship is enormous, and increasingly it is a two-way street," he said. He emphasised that Irish airlines buy more planes from Boeing than any other foreign customer, and hundreds of Irish companies operating in America create thousands of jobs.
Irish economist: No crisis, but we face challenges
Can tariffs threaten Ireland? In a conversation with money.pl, Noel Cahill, an economist from the National Economic and Social Council (NESC), states that the country's situation is unique, but not hopeless.
The NESC representative—an advisory body to the Taoiseach (Prime Minister) and the Irish government points out that while potential tariffs may affect certain sectors of the Irish economy, given the country's heavy reliance on exports, the risk is not particularly severe.
Cahill notes that Ireland, as a small and open economy, is particularly vulnerable to changes in the global trading environment.
Our analyses show that the technology and pharmaceutical sectors would be most exposed to tariffs. These industries are a significant part of Irish exports, but at the same time, we have a diversified economic structure. This gives us some resilience," he points out.
The current situation cannot be considered critical. Although challenges exist, the Irish economy remains relatively stable. Nevertheless, as this is a period of transition, it is important to closely monitor evolving economic and social trends, claims Cahill.
Social challenges and income inequality
Social issues need attention. They may pose a challenge for Ireland in the coming months.
We do not see a dramatic increase in poverty, but there are areas requiring action. Housing availability remains one of the key social challenges. Property prices, especially in Dublin, are rising faster than wages, which may lead to deepening inequalities," notes Cahill.
Will Ireland no longer be a tiger?
It will be difficult for Ireland to repeat the economic success from 30 years ago. It was at the beginning of the 1990s that the Irish economist David McWilliams coined the term "Celtic Tiger," inspired by the previously created term "Asian Tigers," referring to the rapidly developing South Korea, Singapore, and Taiwan. The nickname was given to Ireland due to its rapid economic growth.
Ireland is unlikely to see the growth rate of the 'Celtic Tiger' era again. From 1993 to 2000, our economy grew at a phenomenal rate of over 8%. Today, we need significant public investment and reforms to address supply-side constraints and environmental challenges," he stated.
Another Irish economist, Conor O'Toole, in a conversation with money.pl, acknowledges that in recent years, Ireland's growth has been extremely rapid but driven by a significant increase in international corporate activity. Changes in international trade and tariffs imposed by the Trump administration could potentially be a serious blow to the Irish economy and prevent the growth seen in recent years," he says.
The symbol of Ireland has changed significantly. "Prices are out of this world"
And how do the residents see the change in Ireland's situation? Rising living costs, expensive real estate, lack of preschool spots, and high medical service costs are just some of the problems that Ireland's residents face.
Mr. Tomasz, a Polish immigrant who has been living in Killarney for over 15 years, admits in a conversation with us that the cost of living is increasing.
Currently, housing prices are significantly higher than a few years ago, and renting a room in Dublin can cost even £900 a month. Prices are simply out of this world. Many people can forget about buying property or getting a mortgage," he says.
Migration changes Ireland's demographics. Such data hasn't been seen in 15 years
In 2024, the population of Ireland increased by almost 100,000 people, the largest rise since 2008. According to the Central Statistics Office, 79,300 people arrived due to net migration, and 19,400 were the result of a birth surplus over deaths.
The number of immigrants reached 149,200, of which 30,000 were returning Irish citizens, 27,000 were EU citizens, 5,400 were British, and 86,800 were citizens of other countries, including Ukraine. At the same time, 69,900 people emigrated from Ireland.
From "Celtic Tiger" to a country in crisis
In recent decades, Ireland has experienced several periods of stagnation and prosperity. The country became one of the largest victims of the 2008-2009 crisis. Turbulence in the real estate market triggered mass insolvency, construction production collapsed, and employment in the sector fell by over 60%.
The loss of income sources from the boom period and the costs of deepening recession revealed a fundamental imbalance between public spending and revenue from taxes and other sources in Ireland's public finances. The European Central Bank then stepped in. The ECB provided financial liquidity, and EU countries also provided loans. The largest banks were recapitalised, mainly with money borrowed by the Irish government.
In later years, there was a revival. In terms of GDP per capita, Ireland now ranks in the global TOP 4. However, economists emphasise that these statistics are distorted. They include, among other things, profits of some foreign-controlled international corporations that, as we mentioned earlier, relocated their headquarters to Ireland for tax reasons.
According to Central Statistics Office data, the poverty level in Ireland has risen, reaching 12% in 2024. Particularly alarming is the 64% increase in poverty among the elderly—one in five seniors in Ireland lives below the poverty line.
