Ireland’s economic outlook points to a period of moderation following exceptional performance in 2025 – PwC's latest Ireland Economic Digest

Ireland’s inflation outlook points to a near-term pick-up before easing

PwC expects inflation to rise in the near-term, projecting it will rise to 3.1% in 2026, up from 2.2% in 2025, before easing to 2.3% in 2027 and 1.8% in 2028.  This reflects continued price pressures, particularly in energy and food, driven in part by ongoing geopolitical tensions in the Middle East and associated volatility in global commodity markets.  However, inflation is projected to ease gradually over the medium term, returning to more normal wider euro area trends as global price pressures stabilise.

The labour market in Ireland, while still resilient, is showing early signs of softening.  As highlighted by the CSO, the seasonally adjusted unemployment rate rose slightly to 5.0% on an annualised basis in June 2026. This suggests that job creation is moderating from the exceptionally strong rates seen in recent years. Despite this, overall labour market conditions remain supportive of economic activity.

As noted by the Irish Credit Union Consumer Sentiment Survey in June 2026, consumer sentiment climbed to 62.2 in June. While this marks two straight months of improvement, it remains well below the long-term average of about 83.

Euro area and global growth outlooks soften before gradual recovery

PwC projects that euro area GDP will outperform Ireland in 2026 but that Ireland’s economy will return to faster growth in 2027.

Growth across Ireland’s key trading partners is expected to soften in 2026 before recovering gradually over the medium-term, reflecting the drag from higher energy and commodity prices, ongoing geopolitical uncertainty, and the lagged effects of earlier monetary tightening.

PwC projects euro area growth to ease from 1.4% in 2025 to 0.9% in 2026, before rising to 1.3% in 2027 and 1.4% in 2028.  PwC expects US growth to remain most resilient among major economies, holding broadly steady at 2.1% in 2026 and 2027 and 2% in 2028.  PwC projects UK growth to slow more sharply, from 1.4% in 2025 to 0.9% in 2026, before recovering somewhat to 1.2% in 2027 and 1.7% in 2028.

Ciarán Nevin, Economics Director, PwC Ireland, commented: “Overall, Ireland’s economy remains resilient, transitioning to more moderate growth in 2027. Policymakers and businesses are navigating a more complex global environment, balancing the opportunities of a strong fiscal position with the risks posed by inflation, external uncertainty and softening domestic momentum.”

Methodology for PwC Ireland Economic Digest 

PwC global and UK analysis, national statistical authorities, EIKON from Refinitiv, IMF, Consensus Economics, the OECD, and Fitch Solutions. The projections are a weighted average of projections from these sources. They also incorporate inputs from select teams across the PwC network. The PwC Ireland MDD forecast uses an econometric model to estimate MDD based on the PwC projections for GDP alongside the Central Bank of Ireland forecast for Expenditure and Unemployment. This model is based on the relationship between these variables over the last 20 years.