Ireland has a habit of producing eye-popping gross domestic product (GDP) numbers.
In its latest world economic outlook, the International Monetary Fund (IMF) projects the economy here will expand by 9.1 per cent this year, making it the fastest growing of the world’s more advanced economies.
The forthy prediction, up from a previous forecast of 2.3 per cent, is less than the Department of Finance’s own 10.8 per cent projection, published alongside the budget last week.
The IMF linked the upward revision to the front-loading of exports into the US ahead of tariffs.
It noted Ireland “disproportionately contributed to euro area growth in the first quarter, with export performance driven by pharmaceutical sector transactions, partly as a result of front-loading,” it said.
In its report, the Washington-based fund warned that the patterns which produced these inflated GDP numbers have now largely reversed and “there are increasing signs that the adverse effects of protectionist measures are starting to show”.
Its projection for Irish economic growth next year was downgraded to just 1.3 per cent.
Separately, it noted that core inflation and unemployment in the US have risen in recent months.
[ Negative impact of tariffs starting to show, IMF warnsOpens in new window ]
The higher-tariff environment is curtailing external demand “with profound implications for several large export-oriented economies, while heightened trade policy uncertainty is dampening firms’ appetite for investment,” it said.
A potential incoming slowdown in the US courtesy of tariffs was given more legs by US Federal Reserve chairman Jerome Powell who warned the US labour market was showing further signs of distress, comments that were interpreted as signs he could be ready to support another interest rate cut later this month.
Mr Powell said in Philadelphia on Tuesday that “the downside risks to employment have risen” – the strongest hint yet that Fed officials think they have enough evidence to back another quarter-point cut to US borrowing costs.
Economists have, for months, been warning that the president is effectively sabotaging the US economy by placing tariffs on key inputs while stoking an investment freeze with his stop-start policy announcements.
