IMF Warns Ireland Against Complacency Despite Strong Economic Performance

Dublin: The International Monetary Fund has warned Ireland against becoming complacent about its economic resilience, despite the country continuing to record strong economic performance amid global uncertainty and geopolitical tensions.

In its latest assessment, the IMF said Ireland’s economy remains robust but cautioned that significant structural vulnerabilities continue to pose risks in an increasingly unpredictable global environment.

The organisation highlighted concerns over rising costs, heavy dependence on multinational corporate tax revenues and the growing impact of artificial intelligence on employment.

Growth Expected to Continue at Slower Pace

The IMF forecast that Ireland’s economy will continue to grow steadily, though at a slower pace over the coming years.

According to the report, modified domestic demand growth is expected to decline from 5 percent in 2025 to around 2.5 percent during 2026 and 2027.

Inflation is also expected to remain elevated in the short term due to high energy costs. The IMF projects inflation to average 3.5 percent this year before gradually easing back to 2 percent by 2028.

The report stressed that Ireland’s relatively strong economic position provides an opportunity to address long-term weaknesses and improve sustainable growth prospects.

Dependence on Multinational Corporations a Key Risk

The IMF warned that Ireland’s heavy reliance on multinational companies and corporate tax revenues remains one of the country’s biggest economic vulnerabilities.

It cautioned that widening fiscal pressures, shifting global trade patterns and increasing international policy uncertainty could negatively affect Ireland’s highly globalised economy.

The organisation recommended that the government broaden the country’s tax base and develop more stable revenue streams to support long-term public spending commitments.

Among its recommendations, the IMF suggested directing excess corporate tax revenues into sovereign savings funds and increasing local property taxes to create more sustainable sources of income.

Concerns Over Public Spending

The IMF also warned that government spending has increased rapidly in recent years, particularly in health and social protection sectors.

It noted that spending in several areas is exceeding budget allocations and advised the government to strengthen financial controls in order to avoid persistent overruns.

AI Could Impact 40 Percent of Jobs

The report raised serious concerns about the potential impact of artificial intelligence on Ireland’s workforce.

According to the IMF, Ireland may be more exposed to AI-related job disruption than many other advanced economies, particularly because of its large technology, finance and IT sectors.

The organisation estimated that AI could affect around 40 percent of jobs across the country.

While AI may improve productivity and create new opportunities in certain industries, the IMF warned that it could also lead to job losses and widen income inequality, especially among young people and new entrants to the workforce.

The report urged the government to invest more heavily in worker training and retraining programmes to prepare employees for changes brought by emerging technologies.

The IMF also highlighted growing risks related to cybersecurity and the financial sector as AI adoption accelerates.

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