2026 Ireland country risks: Strong tailwinds set to persist amid strong buffers

The Allianz Trade Economic Research team has given Ireland a Country Risk Rating of AA1: low risk for enterprises. This rating measures the risk of non-payment by companies in a given country. This risk is due to conditions or events outside any company’s control. You can find the full methodology by downloading the PDF report at the end of this article.

Ireland’s GDP is notoriously volatile because of large profit-shifting strategies by multinationals between Ireland and the rest of the world, which create large swings in intellectual property flows. But alternative indicators such as modified domestic demand (MDD), which excludes spending that has little relation to domestic activity, show that the Irish economy has massively outperformed the Eurozone since the pandemic.

The strong economic performance can be attributed to the presence of multinational corporations (notably in the technology, pharmaceutical, chemicals and financial sectors), solid exports to markets such as the US, a skilled labour force, strong immigration inflows and a low structural unemployment rate. The US accounts for 30% of Ireland’s goods exports and much of the inward investment has created well-paid jobs.

The imposition of 15% tariffs in 2025 by the US on the EU – to which Ireland belongs – is not a cause of major concern for the Irish economic model and its growth prospects. While more than half of Ireland’s pharmaceutical exports go to the US, a 15% tariff is manageable to absorb for the highly competitive Irish pharmaceutical sector. Moreover, Ireland has significant economic strengths. Its economy is built around high value-added services and the government has significant fiscal buffers to mitigate any cyclical downturn.

Business insolvencies surged in 2023-24 but started to decline in 2025. We expect lower insolvencies through 2027.

Irish public finances are very strong, thanks to careful management of spending and substantial corporate tax windfalls. The country has consistently run budget surpluses over the past years. As a result, and thanks to strong nominal GDP growth, the public debt-to-GDP ratio has dropped substantially. Healthy public finances provide Ireland with strong buffers to mitigate potential future negative shocks hitting the economy.

On the external front, the country runs massive current account surpluses, thanks to strong exports of high valued-added goods and services (including intellectual property). However, data on external finances should be taken with caution, as they partly relate to tax optimisation strategies of multinational firms. Ireland’ inflated external debt, for instance, can be explained by very large amount of inward investment whose purpose is to reduce global tax liabilities.

The possibility that the US may try to reduce tax avoidance schemes could pose a threat to the external and fiscal position. Inward FDIs could drop corporate income revenues decrease. However, the impact on the real economy would be manageable and Ireland’s public finances can also manage. Besides, multinationals may find ways around new tax rules. Finally, Ireland would retain a competitive tax regime, limiting the degree to which multinationals would scale back their ‘real’ activity taking place in the country.

Ireland’s business environment is very strong, scoring highly in regulatory quality, rule of law and corruption control. Overall, it had the 3rd best ranking of economic freedom in the world in 2025.

Ireland also has a very well-educated labour force and enjoys a significant openness to foreign trade and FDI. In particular, starting a business, protecting minority investors, paying taxes and resolving insolvencies are ranked at the top among other OECD high-income countries. Going forward, the introduction of the minimum global corporate tax reform is expected to only modestly dampen Ireland’s attractiveness, amid significant strengths of the Irish economy that will attractive to corporates.

On sustainability, our proprietary Environmental Sustainability Index places Ireland at 33rd out of 210 economies. Ireland scores well on low CO2 emissions and low water stress, but is lagging behind some peers on recycling, energy use and renewable electricity production.

Ireland’s recent political developments are centred around the aftermath of the 2024 general election, which highlighted a fragmented political landscape. Despite expectations, Sinn Féin’s anticipated surge in support did not materialise. Instead, the centrist coalition of Fianna Fáil and Fine Gael emerged with relative strength but fell short of a majority, necessitating complex coalition negotiations. Economically, the government’s policies aim at improving housing affordability (including an ambitious target of 300K homes built) and energy upgrades, but progress has been slow thus far.