AI Trade Boom Boosts Irish Economy as Inflation Risks Persist, Says Ibec

Artificial intelligence-related trade is becoming an increasingly important driver of Ireland’s economy, with business group Ibec forecasting that activity linked to the sector will double over the next five years as investment in technology continues to accelerate.

In its latest economic outlook, Ibec said spending on information and communications technology (ICT) equipment and software has reached almost €6 billion over the past 12 months. That marks a 50% increase compared with the same period a year earlier and represents a doubling from levels recorded two years ago.

The report suggests much of the imported technology is being routed through Ireland before being exported to the United Kingdom, continental Europe and other international markets. According to Ibec, this pattern is reflected in significant increases in inventory levels recorded in Ireland’s national accounts, highlighting the country’s growing role in global AI supply chains.

Ibec Chief Economist and Head of National Policy Gerard Brady said Ireland is well positioned to benefit from the rapid expansion of AI-related trade, even if it is not a leading developer of advanced AI models.

“We may not be at the forefront of developing new AI models, but early evidence suggests we have an opportunity to be a central node in AI-related supply chains,” Brady said.

He added that Ireland also has an opportunity to prepare its workforce for the technological changes reshaping industries worldwide.

“We also have a massive opportunity to be the country with the best-prepared workforce for the generational change in work and skills currently underway,” he said.

While AI investment is providing fresh momentum for the economy, Ibec warned that inflationary pressures remain a concern. The organisation has raised its inflation forecast for this year to 3.6%, up from its previous estimate of 2.4%.

The upward revision reflects higher energy prices linked to the conflict involving the United States and Iran, along with uncertainty surrounding the reopening of the Strait of Hormuz, a key global shipping route for oil and gas supplies.

Ibec cautioned that inflation could rise as high as 5.7% this year if geopolitical tensions escalate and further disrupt energy markets.

“The collapse of the US-Iran ceasefire less than three weeks after implementation began underlines the uncertainty running through the global economy this year,” Brady said.

The business group also expects trade disruptions caused by US tariffs and the earlier surge in exports ahead of those measures to create what it described as a “whiplash” effect on economic growth in 2026. As a result, it has trimmed its GDP growth forecast for next year to 0.9%.

Despite those challenges, Ibec expects Ireland’s domestic economy to remain resilient. Strong business investment and continued consumer spending are projected to support domestic demand growth of 3.3% in 2026, rising to more than 3.7% in 2027. The report noted that while the labour market is beginning to show signs of softening, investment activity continues to provide important support for economic growth.