The IMF pointed out that Ireland played a role in eurozone growth during the first quarter of the year, with export performance from pharmaceutical companies, partly due to the front-loading.
In its latest global economic outlook, the International Monetary Fund (IMF) predicts a 9.1% growth in Ireland’s economy this year. It may be positioned as the fastest-growing of the world’s advanced economies.
The upbeat forecast, which was previously 2.3%, is still lower than the Irish Department of Finance’s estimate of 10.8%, published alongside the budget last week.
The International Monetary Fund (IMF) attributed the upward effect to companies rushing to export to the United States (US) before the tariff takes effect.
It pointed out that Ireland played a role in eurozone growth during the first quarter of the year, with export performance from pharmaceutical companies, partly due to the front-loading.
However, the IMF has warned that the negative effects of the US tariffs are beginning to be felt. To date, protectionist trade measures have had a limited impact on the global economy, mainly because consumers and companies rush to spend and invest, providing a temporary boost to activity before the tariffs take effect, as the Washington-based institute stated in its latest stance report.
The report notes that the patterns have now largely reversed, and there are increasing signs that the negative consequences of protectionist policies are becoming apparent.
The IMF observed that core inflation and unemployment in the United States are increasing, and inflation is also stabilizing around central bank targets in many countries. This creates significant challenges for monetary policymakers as uncertainty and tariffs create a burden on economic activity.
The high tariff environment is also reducing global demand, which has significant consequences for several large export-oriented economies. The increased uncertainty in trade policies is making companies less willing to invest, the report claimed.
Recent data from China showing exports growing more than expected in September would be good news for Beijing, but this came three days after President Trump threatened to impose an extra 100% tariffs on Chinese goods, suggesting that China is in a relatively good position to handle further escalation in the trade war.
China’s exports were up 8.3% in September compared to the year earlier, and versus a 4.4% in August. September’s increase in exports was high even though exports to the US fell 27% due to Trump’s tariffs.
According to the IMF report, it warned that the patterns that produced these inflated GDP numbers, such as front-loading exports, have now faded. It has downgraded its prediction for Ireland‘s growth for next year to just 1.3%.
A possible slowdown in the US, triggered by tariffs, was given further legs by US Federal Reserve Chairman Jerome Powell, who warned that the US job market is showing additional signs of weakness. The comments were interpreted as signs that he could be ready to favour another interest rate cut soon.
Mr Powell remarked in Philadelphia that there are downside risks to the employment growth, suggesting a stronger hint that Fed officials have enough evidence to lower US borrowing costs by a quarter point.
Economists have warned for months that the US President’s tariffs are effectively sabotaging the US economy, coupled with unpredictable policy changes, which are discouraging investment.
The IMF’s report predicts that 2025 will be a year of instability and rapid change, largely due to shifting policy priorities by the US and other countries, which are adjusting accordingly.
The report claims that the world economy is reshaped by tighter immigration rules and reduced development aid.
The IMF also noted a significant drop in net migration to many developed economies that have historically attracted large numbers of migrants.
