Ireland’s Economy Contracts 12.1% in Q1 2026

Ireland’s economy contracted by 12.1% in the first quarter of 2026, extending a revised 4.2% decline in the previous quarter and exceeding preliminary estimates of a 2.0% drop. Modified domestic demand, a broad measure of underlying activity covering personal, government, and investment spending, grew by 0.6%, while Gross National Product (GNP) increased by 1.5%. The multinational enterprise (MNE)-dominated sectors contracted sharply by 27.1%, with industry (excluding construction) down 35.0% and information & communication down 2.0%. In contrast, non-MNE sectors expanded by 0.4%, with the professional, administrative & support sector rising by 1.5% and construction increasing by 1.2%. On the expenditure side, exports decreased by 7.0%, while imports rose by 4.2%, resulting in a 39.8% contraction in net exports. Capital investment surged 13.8%, though machinery and equipment investment declined. Personal consumption and government spending increased by 0.6% and 0.5%, respectively.

Ireland’s gross domestic product fell by 2% quarter-on-quarter in the first quarter of 2026, following a 3.8% decline in the previous quarter, according to preliminary estimates. This marks the second consecutive quarter of economic contraction, driven largely by a downturn in the multinational-dominated industrial sector. On an annual basis, the economy plunged by 6% in Q1, reaching its lowest level since Q4 2023 and reversing a 2.2% gain in the preceding quarter.

Ireland’s GDP fell by 3.8% quarter-on-quarter in the final quarter of 2025, worse than the initial estimate of a 0.6% drop, after showing no growth in the previous period. This marked the sharpest contraction since the second quarter of 2020, weighed down by a 2.6% drop in the multinational-dominated sector, led by industry excluding construction, which fell 3.6%. On the expenditure side, growth in household consumption picked up (0.9% vs 0.4% in Q3) but slowed in government spending (0.3% vs 1.5%). Fixed investments declined by 4.6%, reversing a 13.4% increase in the third quarter. In trade, exports dropped (-3.4% vs 2.4%) more than imports (-1.3% vs 10.4%), resulting in a 9.0% fall in net exports. On a yearly basis, GDP rose by 2.2%, slowing sharply from an upwardly revised 11.2% increase in the prior quarter and marking the weakest pace of growth since a contraction in the second quarter of 2024. In 2025, Ireland’s economy expanded by 12.3%, accelerating from a 2.6% growth in 2024.