Demand for infrastructure, services, and employees in the Republic has never been higher, while the State’s ability to meet demand has never been more stretched, according to KPMG’s economic outlook.
The professional services company said the Republic “has difficulties managing its own prosperity”, pointing to key infrastructure problems such as the housing crisis to underpin the conclusion.
“Even part-solving the housing issue is complex and requires several policy levers to work in tandem to have a chance of success,” it said.
KPMG head economist Daragh McGreal: “For several years, industry and government reports have been highlighting infrastructure and service bottlenecks across the country: in utilities, transport, healthcare, and housing, among others.
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“As each year has passed, demand has grown faster than the economy’s ability to release supply. In all cases, historically, these dynamics have led to lower standards of living.
“A key challenge is that growing availability of jobs is happening in parallel to quality-of-life issues for many people, for example, in housing, commuting and accessing childcare.”
KPMG said the Republic’s economy continued to grow in the first half of 2025, enabled both by the export activity of US multinationals and by strong levels of demand domestically.
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Throughout 2025, KPMG anticipates that gross domestic product (GDP) growth will be 3.3 per cent or greater, excluding the one-off front-loading of exports in the first quarter.
Growth may moderate to between 1.5 per cent and 2 per cent in 2026 as tariffs affect exports.
Growth in modified domestic demand, which strips out multinational activity, could be 2.5 per cent or greater this year and will be similar in 2026, KPMG said, with this growth driven by domestic consumption and infrastructure spend.
Globally, KPMG International is forecasting GDP growth to slow to rates not seen since the global financial crisis of 2008. It predicts that GDP growth internationally will slow from 3.2 per cent in 2024 to 2.7 per cent in 2025 before regaining some ground to 2.8 per cent in 2026.
