Gold prices edge higher on raised Fed rate cut hopes
Investing.com -- On Friday, May 9, 2025, Fitch Ratings affirmed Ireland’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ’AA’, indicating a stable outlook. The rating reflects Ireland’s strong credit fundamentals, including robust institutions and the second-highest GDP per capita in the Fitch-rated sovereign universe.
The rating is also supported by Ireland’s strong governance indicators and the euro’s reserve currency status. However, these strengths are offset by high GDP volatility, economic concentration, and significant exposure to US and global tax and regulatory changes impacting multinational enterprises (MNEs).
Ireland’s economy faces potential risks from US trade and corporate tax policies, particularly tariffs on pharmaceuticals which could affect export demand. In 2024, 33% of Ireland’s goods exports were destined for the US, with pharmaceuticals comprising 61% of these exports. Changes to US corporate taxation could pose a structural risk to Ireland’s investment-dependent economic model, considering US MNEs employ about 8% of the Irish labour force.
Fitch projects Ireland’s GDP growth to be 3% in 2025 and 2% in 2026, supported by employment and real wage increases. However, US tariff uncertainties may limit household spending. Government consumption and infrastructure investments are expected to bolster growth, but MNE investments could be subdued.
The rating agency anticipates budget surpluses of 1.4% of GDP in 2025 and 1.3% in 2026, following a surplus of 4.3% of GDP in 2024. This was largely driven by a one-off payment from the Court of Justice of the European Union related to the Apple (NASDAQ:AAPL) case and a robust labour market.
Ireland’s reliance on corporate tax revenue from MNEs is significant, contributing 27.1% of total tax revenues in 2023. This concentration makes Ireland vulnerable to shifts in global tax policies and US tariffs, potentially affecting corporate tax revenue.
To mitigate the risks of volatile corporation tax receipts and support long-term economic stability, Ireland has established two funds: the Future Ireland Fund (FIF) and the Infrastructure, Climate and Nature Fund (ICNF). As of April 2025, the FIF held over EUR8 billion, with annual contributions of 0.8% of GDP expected until 2035.
Public debt was 40.9% of GDP at the end of 2024, below the ’AA’ median of 48.8%. Fitch forecasts a declining trend with the debt-to-GDP ratio expected to fall to around 37% in 2026 and 35% in 2028.
The Irish economy has a strong external position, partly reflecting the MNE sector, with the overall current account surplus at 17.2% of GDP in 2024. The banking sector in Ireland is robust, maintaining strong profitability and capitalisation, offering a buffer against economic uncertainty.
Fitch outlined potential factors that could lead to a negative rating action, including a severe macroeconomic shock affecting Ireland’s GDP growth or an increasing trend in general government debt. Conversely, a further reduction of the general government debt burden or a material reduction of risks to public finances from corporate tax revenue could lead to a positive rating action.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.