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On Tuesday, Ireland said its economy experienced an unexpected downturn in the final quarter of 2024, with a reported 1.3% contraction compared to the previous quarter.
The decline, primarily attributed to a decrease in the multinational-dominated Industry sector, comes as a setback for the eurozone's overall economic performance.
Despite this, the Central Bank of Ireland remains optimistic, forecasting a rebound in growth for 2024 and 2025.
The contraction in Ireland's GDP marks a significant shift from the 6.3% year-over-year growth seen in the same period. The Central Statistics Office highlighted the decline in the Industry sector as a key factor behind the economic shrinkage.
Ireland's economic performance throughout 2024 was a mix of ups and downs, culminating in a modest 0.3% growth for the year. This was a stark contrast to the rapid expansion during the Covid-19 pandemic, driven by a pharmaceuticals boom.
Nevertheless, the Central Bank of Ireland predicts a return to pre-pandemic growth rates, projecting GDP increases of 4.2% and 4.5% for the next two years, respectively.
These projections, however, come with a caveat. The Irish economy faces potential risks from the U.S., particularly if President Trump's administration introduces new tariffs on European imports or alters tax regulations.
Such changes could adversely affect U.S. businesses based in Ireland, which contribute significantly to the nation's employment and government tax revenues.
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