Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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53. To ask the Minister for Finance if he is concerned by the contraction of the domestic economy as shown by the quarterly national accounts for the final quarter of 2024; and if he will make a statement on the matter. [15669/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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Modified Domestic Demand contracted in the fourth quarter of 2024 driven largely by a fall in modified investment. However, given the volatile nature of modified investment, the quarterly estimates alone are not indicative of underlying trends in the domestic economy. For the year as a whole, the domestic economy grew at a solid pace last year, with Modified Domestic Demand increasing by 2.7 per cent. The growth in the domestic economy is consistent with the strength of our labour market – with a record 2.8 million people in employment at the end of last year.

The positive momentum from last year has carried forward into this year, with the unemployment rate remaining low at around 4 per cent. Inflation also eased significantly throughout last year and stood at 1.4 per cent in February, one of the lowest rates of inflation amongst euro area countries.

Despite the relatively strong position of the domestic economy at the start of this year, the outlook has become increasingly uncertain in recent months with risks now heavily tilted to the downside. As a major beneficiary of global economic integration, the Irish economy is exposed to any potential reversal of this trend.

Our policy response to these challenges will focus on controlling ‘the controllables’ – making best use of the forces that we can influence. In particular, we will continue to invest in the necessary infrastructure in key strategic areas, such as energy, water, housing and transport, to ensure the Irish economy remains competitive. We must also continue to invest in our people, ensuring they have the skills and knowledge needed to meet the demands of the modern workplace.

The Government is also building up our fiscal buffers through transfers to the Future Ireland Fund and the Infrastructure Climate and Nature Fund . These funds will help ensure that we have the fiscal resources at our disposable to meet future expenditure needs.

I am confident that this approach will mean we are in the strongest possible position to meet future challenges in an increasingly uncertain world.