The IMF's latest World Economic Outlook projects that Ireland's gross domestic product will grow by 9.1% this year, up substantially from the previous forecast of 2.3% in April.
Irish GDP, which includes the effects of multinationals, increased 2.6% in 2024 and is expected to grow by 1.3% in 2026, down from 2.1% in April's forecast. The study forecasts consumer price of inflation of 1.7% this year and next year.
Ireland's current account balance as a proportion of GDP is forecast to decline from 16.2% to 11.1% this year before rising to 11.5% in 2026, while unemployment will stabilise at 4.6%.
The IMF said that Ireland "disproportionately contributed to euro area growth in Q1, with export performance driven by pharmaceutical sector transactions, partly as a result of front-loading" ahead of the introduction of US tariffs."
The outlook for Europe has improved since the EU-US trade deal was agreed, and the eurozone economy is now expected to grow 1.2% in 2025 and 1.1% in 2026, although well below the growth seen in the US.
Germany is on track to increase GDP by 0.2% this year and 0.9% next year after recovering from recession, while France's economy growth is expected to accelerate from 0.7% to 0.9% next teat.
The UK is projected to grow by 1.3% this year and next.
The IMF has raised its forecast for global growth this year from 3% to 3.2% and left its prediction for 2026 unchanged at 3.1%.
"The good news is that growth impact of the trade shock is modest so far," IMF chief economist Pierre-Olivier Gourinchas told reporters ahead of the publication of the WEO, adding that the private sector had also supported growth by responding to Trump's tariffs in an agile way.
He added that other factors, such as the AI boom and fiscal policies in Europe and China, had also helped to prop up the global economy, but warned that trade uncertainty continued to pose downside risks.
US President Donald Trump threatened fresh tariffs on China over Beijing's decision to tighten export controls on the rare earth minerals crucial to the defence and high-tech sectors.
"Everything is very fluid," Gourinchas said. "But I think it's a very useful reminder that we live in a world in which this kind of increase in trade tensions, increase in policy uncertainty, can flare up at any time."
The IMF expects the global inflation rate to remain elevated at 4.2% this year and 3.7% in 2026, underpinned by elevated inflation in several countries, including the US.
The group now projects the US economy to grow 2% this year and 2.1% next year, both down from 2.8% in 2024. China's growth is due to slow from 5% to 4.8% this year and 4.2% next year, in line with previous estimates.
China slowdown has been driven by a reduction in net exports, which have been at least partly offset by growing domestic demand fuelled by "policy stimulus," the IMF said.
*This article was originally published on BusinessPlus.ie.
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