The Central Bank of Ireland has raised its economic growth forecasts for 2026 and 2027, citing resilient consumer spending and a significant increase in multinational investment tied to artificial intelligence infrastructure.

In its quarterly macroeconomic projection released on Wednesday, the central bank upgraded its forecast for modified domestic demand (MDD)—its preferred metric for gauging underlying domestic economic activity—to 3.8% for 2026, up from 3.3% projected in June. Growth projections for 2027 were also raised to 3.4%, compared to the previous estimate of 2.8%.

Central bank officials favor MDD over gross domestic product (GDP) because it excludes volatile distortions caused by Ireland's disproportionately large foreign multinational sector. MDD expanded by 4.7% in 2025, driven by Ireland's role as a major European hub for data centers and technology infrastructure amid the global expansion of artificial intelligence.

By contrast, overall GDP forecasts remain subject to wider swings due to international trade patterns and multinational accounting shifts. The regulator projects Irish GDP to contract by 1.4% in 2026 before rebounding to 4.3% growth in 2027. Previous tariff-related stockpiling of weight-loss drug components manufactured in Ireland had inflated GDP growth to 12.3% in 2025 before unwinding earlier this year.

Eurostat data cited by the central bank indicates that export volumes of weight-loss drug ingredients remained largely steady in the first half of 2026, despite a steep decline in reported export valuations compared to the same period in 2025. Robert Kelly, Director of Economics at the Central Bank of Ireland, noted that shifts in how multinational pharmaceutical companies manage patent valuations could explain the divergence, though concrete proof remains limited.