Central Bank of Ireland
2025 modified domestic demand forecast cut to 2.7% from 3.1% GDP growth forecast lowered to 4.0% in 2025 and 2026 Inflation outlook revised higher, with HICP now seen at 2.2% in 2025 Risks strongly tilted to the downside due to U.S. trade and tax policy threatsThe 2025 modified domestic demand (MDD) forecast—the bank’s preferred economic measure—was revised down to 2.7% from 3.1%. GDP growth expectations were also trimmed to 4.0% in both 2025 and 2026, reflecting softer consumption, investment, and export growth.
The bank also raised its inflation projections, with headline HICP inflation for 2025 revised up to 2.2% from 1.7%, reflecting lingering price pressures.
EUR up
Modified Domestic Demand (MDD) is the Central Bank of Ireland’s preferred measure of domestic economic activity. It provides a more accurate picture of the Irish economy by adjusting for distortions caused by multinational corporations operating in the country.
Why is MDD Used Instead of GDP?
Ireland’s GDP is heavily influenced by foreign multinational firms, especially in technology and pharmaceuticals. These companies engage in activities like intellectual property transfers and aircraft leasing, which inflate GDP figures but do not reflect real economic conditions for Irish households and domestic businesses.To counter this distortion, MDD focuses on domestic demand, measuring:
Personal consumption (household spending)Government spendingModified gross domestic fixed capital formation (GDFCF) – an adjusted measure of investment that excludes intellectual property and aircraft leasing, which are often driven by multinationals rather than local demand This article was written by Eamonn Sheridan at www.forexlive.com. Read More Details
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