Ireland

Despite risks to the outlook, Ireland’s capacity to repay the Fund is strong, given robust economic and fiscal performance, large cash buffers, manageable financing needs, and favorable market financing conditions. Ireland has continued to grow at a healthy pace in 2016, mainly driven by domestic demand, with broad-based employment gains and a declining unemployment rate. Fiscal consolidation continues, and the debt burden is on a steady downward path. The baseline outlook remains broadly positive, but risks are tilted to the downside. Brexit-related risks, a sustained low-growth low-inflation environment in Europe, external political uncertainties, rising anti-globalization sentiment, ongoing developments in corporate tax treatment at the international level, and a challenging domestic political context add to uncertainty. The impact of operations by multinationals on headline GDP also complicates the assessment of domestic activity essential to economic decision making.