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Central Bank of Ireland: Economic effects of tariffs unclear
Youtube· 2025-09-18 11:33
Economic Outlook - The economy has shown resilience despite external uncertainties, with expectations for steady growth, albeit lower than it would have been without tariffs, projected at an average of about 2.5% per year for the next three years [1][3]. Trade Agreements and Tariffs - A framework agreement on trade between the United States and the EU has been established, incorporating a 15% tariff rate into forecasts, which is higher than initial expectations but not drastically different from the original 10% [2][4]. - The implementation of tariffs is expected to incur costs for the Irish economy, leading to lower growth than previously anticipated [5][6]. Economic Performance and Government Spending - Recent data indicates greater momentum in the Irish economy, supported by increased government spending, particularly in infrastructure, which adds stimulus [2][3]. - The uncertainty surrounding tariffs has decreased compared to previous projections, although economic effects remain uncertain as businesses and households adapt to the new trading environment [6][7]. Foreign Direct Investment (FDI) - Ireland's attractiveness for foreign direct investment is influenced by factors such as membership in the single market, high educational attainment, and a competitive corporate tax framework [10]. - Approximately 30% of total employment in Ireland is in the multinational sector, with about 15% of that being companies producing for export [9]. Infrastructure and Competitiveness - Infrastructure is identified as an area where Ireland lags compared to other countries, prompting government focus on strengthening it to remain competitive in a fragmented global environment [11][10]. - The future flow of FDI into Ireland will depend on how the country adjusts to maintain its attractiveness amidst global changes [10].