The overall increase in personal spending is 20pc since 2019, taking account of inflation. However, it is much less per person, as there has been a big increase in the population since then.
Dermot O’Leary, chief economist with Goodbody, said: “The growth is quite modest in the context of overall real disposable income growth trends, with the household savings ratio remaining quite high.”
Modified Domestic Demand (MDD), the most reliable measure of the Irish economy’s performance, increased by 1pc in the last quarter of 2025. This acceleration pushed the overall growth rate for last year up to 5pc.
“Given the heightened uncertainty that existed, this represented yet another year of outperformance for the Irish economy, possibly only exceeded by Malta last year,” Mr O’Leary said.
“On a longer-term horizon, MDD was 25pc higher in Ireland than it was in 2019, relative to just 6pc in the euro area overall.”
Gross Domestic Product (GDP) was down 4pc in the last quarter, but up 12pc on the full year. This is not regarded as a reliable barometer of the Irish economy’s performance, due to the warping effect of multinationals’ activity here.
The overall increase in GDP last year was driven by goods exports to the US, particularly of pharmaceutical products, with spikes in March and September related to tariffs. Additional demand for obesity and diabetes drugs manufactured by Eli Lilly is also reflected in the export figures.
Thomas Pugh, an economist at the consulting firm RSM, described the contraction in Irish GDP in the last quarter of 2025 as “just noise”.
“The domestic economy still grew by 1pc, by almost 5pc in 2025 as a whole,” he pointed out. “In any case, the far bigger question now is whether the recent rise in energy prices lasts. If sustained, it would push up inflation and dampen growth.
“Ireland imports almost 80pc of its energy from abroad, making it particularly exposed to rising wholesale prices.”
Mr Pugh said that if the 60pc rise in European gas prices over the last few days is sustained over the course of this year, it could push the rate of inflation back over 3pc.
The quarterly national accounts published by the Central Statistics Office show that, adjusted for inflation, the total wage bill increased by just 1pc last year. Since the numbers at work increased by more than 1pc, this means there was a small decrease in the level of real wages per worker.
The Minister for Finance, Simon Harris, said that despite external headwinds, the Irish economy grew strongly last year.
“While the headline figures may somewhat overstate the economy’s underlying growth, I am encouraged that consumer spending grew by a solid 3pc. This reflects rising real incomes and the strength of our labour market, with a record 2.83 million people in employment at the end of 2025,” he said.
“Encouragingly, building and construction investment also recorded robust growth, up 9 per cent last year reflecting the solid momentum in the residential sector.”
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