Irish pharma exports were the main driver of euro zone exports in the first quarter, according to the European Central Bank (ECB).
In its latest economic bulletin, the Frankfurt-based central bank said exports of euro area goods “rose substantially” – by 4.9 per cent – in the first three months of the year on the back of “US tariff-related front-loading”.
“This was driven chiefly by pharmaceutical exports, mainly from Ireland and via Switzerland, but also from Germany, France and Italy,” it said.
Irish good exports rose by 64 per cent to €88.4 billion in the first quarter as companies fast-tracked product into the US to avoid incoming tariffs.
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The ECB, however, warned that the export boom may be short-lived.
[ Irish exports surged ahead of Trump’s ‘liberation day’ tariffsOpens in new window ]
“While more front-loading may take place in the coming months, higher tariffs, policy uncertainty and the appreciation of the euro are expected to cause headwinds for export volumes further ahead,” it said.
It also warned that on the import side, “the appreciation of the euro and trade deflection resulting from US-China trade tensions” were likely to dampen import prices.
The stronger euro has helped bring down inflation quicker than expected. Headline inflation is now set to average 2 per cent this year, 1.6 per cent in 2026 and 2 per cent in 2027, it said.
In its report, the ECB warned the economic outlook for the bloc was “clouded by trade tensions and elevated global uncertainty”.
For 2025 as a whole, these effects are seen to be partly compensated by stronger than expected economic activity in the first quarter.
In the medium term, economic activity will be supported by recently announced fiscal measures, including Germany’s €1 trillion military and infrastructure investment plan.
US president Donald Trump has threatened to impose 50 per cent tariffs on imports from the EU but has put a stay on the measure until July 9th to allow for talks.
[ Von der Leyen: EU needs until July 9th to reach trade deal with USOpens in new window ]
“Overall, the conditions remain in place for euro area GDP growth to strengthen over the projection horizon,” the ECB said.
“In particular, rising real wages and employment, less restrictive financing conditions – mainly reflecting recent monetary policy decisions – and a rebound in foreign demand in the later part of the projection horizon should all support a gradual recovery.”
The bank noted that trade tensions and the stronger exchange rate have resulted in a downward revision to growth for 2026, while growth is unrevised for 2027.
It sees GDP growth across the bloc averaging 0.9 per cent in 2025, 1.1 per cent in 2026 and 1.3 per cent in 2027.
On the US economy, the ECB said the growth outlook has deteriorated.
“Real GDP turned slightly negative in the first quarter of 2025, as the front-loading of imports resulted in a large negative contribution from net trade.
“At the same time, domestic demand remained relatively solid; it is, however, expected to slow down as the impact of tariffs take hold,” it said, noting that tariffs are projected to increase the cost of imported goods, “which will likely spill over to domestic prices”.
