PwC forecasts steadier growth for Irish economy
Ireland’s domestic economy is expected to continue growing over the coming years, although at a more moderate pace, according to PwC Ireland, as inflation, weaker consumer confidence and global uncertainty continue to influence economic conditions.
PwC said the slower pace reflects ongoing risks from global uncertainty, inflationary pressures and softer domestic economic momentum
In its latest economic outlook, PwC forecasts headline gross domestic product (GDP) will decline by 2.5% in 2026 before returning to growth in 2027. However, the firm notes that GDP remains heavily influenced by multinational activity, making it an unreliable indicator of underlying domestic economic performance, as per The Irish Times.
Instead, PwC points to Modified Domestic Demand (MDD), which excludes the impact of multinational intellectual property and aircraft leasing activity, as a more accurate measure of the domestic economy.
The firm expects MDD to grow by 2.7% in 2026, compared with 4.6% in 2025, before moderating to annual growth of 2.5% in both 2027 and 2028.
PwC said the slower pace reflects ongoing risks from global uncertainty, inflationary pressures and softer domestic economic momentum.
Inflation is forecast to average 3.1% in 2026, up from 2.2% last year, before easing to 2.3% in 2027. Continued price pressures in energy and food, linked to geopolitical tensions in the Middle East and volatility in global commodity markets, are expected to remain key drivers.
The firm believes inflation should gradually return to levels more closely aligned with wider eurozone trends as global price pressures stabilise.
PwC’s outlook broadly aligns with recent forecasts from both the Central Bank of Ireland and the Economic and Social Research Institute (ESRI).
The Central Bank recently revised upwards its inflation forecasts for the period to 2028, citing expectations that energy prices are unlikely to return to previous levels following recent geopolitical developments.
Meanwhile, the ESRI has increased its inflation forecast while lowering expectations for consumer spending. However, it has marginally upgraded its outlook for domestic economic growth, forecasting Modified Domestic Demand to increase by 2.6% in 2026.
According to the ESRI, continued investment by multinational technology companies in data centres, artificial intelligence infrastructure and information and communications technology equipment remains a key driver of domestic economic activity.
