Irish government predicts budget surplus of more than €8bn

This year’s forecast has been revised down slightly since October’s budget.

Irish domestic output is estimated using a measurement called Modified Domestic Demand (MDD).

It strips out the distorting effects of multinational companies on Ireland’s GDP measurement.

MDD grew rapidly after the pandemic but growth slowed to just 0.5% last year as inflation and higher interest rates hit disposable incomes.

Mr McGrath said the evidence suggests the economy is in “reasonably good shape” and that some inflationary pressures should continue to ease and “support a pick-up in economic activity”.

He added the “brightest economic spot” is the labour market with the country expected to remain at around technical full employment for the foreseeable future.

Despite the strong economic performance, Ireland’s governing coalition is struggling in the polls as high housing costs and strained public services mean many people feel they are not sharing in the country’s prosperity.