January Update 2025

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 In this month’s issue we enclose Aviva’s Investment outlook for 2025

The Economic Outlook For 2025

2024 was another solid year for the Irish economy both economically and politically, particularly when we observe what is going on in a myriad of other countries around the world. The key strengths in 2024 included a strong labour market, strong growth in tax revenues, a solid aggregate household balance sheet, and a strong rebound in exports after a setback in 2023. The consumer side of the economy and the SME sector had a challenging year. Hospitality and retail businesses were particularly challenged.

The key positives for the Irish economy include:

  • Solid economic momentum.
  • Record levels of employment.
  • Low unemployment.
  • A stable FDI sector.
  • A stable banking system, although it is overly concentrated.
  • Strong public finances, helped by windfall corporation tax receipts and the ECJ Apple tax ruling.
  • Falling interest rates.
  • Record household deposits, lower levels of household debt and in general, a strong personal balance sheet.
  • Political stability.
  • Budget 2025 was a very stimulatory package and will provide strong support to the overall economy in 2025.

The key threats and challenges to the wellbeing of the Irish economy largely emanate from outside the country. The key threats include:

  • A global trade war driven by Trump tariffs and retaliation from US trade partners.
  • Inflation spiking again, driven by energy prices, higher prices due to tariffs, and labour market inflation driven by deportation of migrants in the US.
  • An overly expansionary fiscal policy in the US driven by deficit financed tax cuts by the Trump presidency.
  • A significant correction in what is a very highly valued global equity market background.
  • A Russian victory in Ukraine.
  • A further escalation of the war in the Middle East.

Ireland has an inordinate dependence on US multinationals in terms of direct and indirect employment, and more particularly and worryingly, income tax andcorporation tax receipts. It remains to be seen what the Trump administration might do to further the ‘America first’ agenda, but the risks to Ireland are compelling. In some ways there is not a lot we can do to counter those risks other than deep diplomatic engagement to mend fences; and to ensure that in vital strategic areas such as energy, water, and housing serious efforts are made to address the deficiencies.

 

The Irish economy should continue to perform reasonably strongly over the coming year with growth of up to 4 percent in modified domestic demand possible.The threats posed by the Trump presidency will have to be watched very closely.

For a more in depth update from Aviva please click the following link:

Available by clicking here

 

Should you wish to discuss any of the above or need any further information or advice, please do not hesitate to contact a member of our advisory team at Jim@hegarty.ie, Niamh@hegarty.ie, Frank@hegarty.ie & Ross@hegarty.ie or alternatively you can call the office directly on 01 4972544.

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January Update 2025

   In this month’s issue we enclose Aviva’s Investment outlook for 2025 The Economic Outlook For 2025 2024 was another solid year for the Irish

Please do not hesitate to contact us should you wish to discuss the above requirements in more detail or for further information.
We can be contacted by phone at (01) 4972544 or email info@hegarty.ie