AIB Group Plc expects Ireland's domestic economy to grow more than previously forecast, driven by government investment in housing infrastructure. The bank raised its forecast for modified domestic demand (MDD) growth to 3.8% in 2026, up from 2.7% in its May forecast. For 2027, it now expects 3.1% growth, compared with an earlier projection of 2.6%.
MDD is typically a more accurate measure of the Irish economy than gross domestic product, as it aims to strip out multinational activity. This makes it a closely watched indicator for assessing the health of the economy beyond the large footprint of multinational companies operating in the country.
The bank nonetheless warned that risks remain tilted to the downside. Rising energy prices, geopolitical uncertainty, inflation and higher borrowing costs could all weigh on the outlook, it said.
"Strong public, household and business balance sheets provide important resilience, but geopolitical uncertainty, inflation and higher borrowing costs mean the risks to the outlook remain tilted to the downside," the bank's Chief Economist David Mc Namara said in a statement in Dublin on Thursday.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing