Welcome to our
HFM January Update
In this month’s issue we enclose Aviva’s Investment outlook for 2026
The Economic Outlook For 2026
Despite the intense economic and political uncertainties that dominated the global agenda in 2025, global economic performance turned out better than expected and proved quite resilient in the face of so much uncertainty. The main factors behind the more resilient global performance include strong AI-related investment, improved financial conditions, lower official interest rates, a front-loading of exports ahead of threatened tariffs and significant fiscal stimulus in several countries but particularly in China and the US.
The Irish economy delivered another solid performance in 2025 as evidenced by
- A strong labour market
- strong growth in tax revenues
- strong export performance
- solid consumer spending
At this juncture, it appears that the key issues to watch over the coming year include:
- The sustainability of the AI investment boom
- Bond market volatility driven by fiscal deficits in countries such as the US, Italy, France and the UK and the appointment of the next Head of the Federal Reserve in May
- The relationship between China and Taiwan
- The Russian reaction to ongoing EU support for Ukraine
- The requirement to increase defence spending everywhere • The possibility that inflation could edge higher
- Growing anti-immigrant sentiment around the world
- The relationship between the US and Venezuela and the possible implications for other Latin American countries and Greenland
- The increasing sophistication of cyber terrorism
- More extreme weather events and the increasing move away from climate change policies
- Several important elections in 2026.
2025 will be remembered as a dramatic year for global politics and the global economy. President Trump took office in January and did not delay in pursuing a very aggressive policy agenda. It began at the beginning of April when President Trump announced a series of reciprocal tariffs that would be applied to a significant number of countries. Since then there have been several different tariff announcements and threats, but so far, he has not delivered to the extent that he threatened. President Trump is using the threat of tariffs as a negotiating tactic but this has given rise to significant business uncertainty.
Ireland has an inordinate dependence on US multinationals in terms of direct and indirect employment, and more particularly and worryingly, income tax and corporation tax receipts. While the Irish economy should continue to perform reasonably strongly over the coming year with growth of up to 4.1 percent in modified domestic demand possible, the threats posed by the Trump presidency will have to be watched very closely.
For more information from ‘Jim Power’s review of 2025 and 2026 outlook‘, please click below.
