Commentary from Anne O’Doherty, Head of Life & Pensions, Xeinadin Financial Services (Ireland)
As we enter the final quarter of 2025, markets remain delicately balanced between optimism and caution. The third quarter brought further evidence of economic resilience in the face of global uncertainty, even as investors weighed the impact of fluctuating trade policies and shifting interest rate expectation along with continued inflationary pressure.
Volatility certainly remains a feature across international markets. Domestically, the unveiling of Budget 2026 dominated the economic conversation over the past few weeks. The key theme here was around balancing cost-of-living relief with long-term fiscal prudence.
Ireland: Current Economic Overview
Ireland’s economy remains steady, with GDP growth holding positive and inflation easing to just above 2%. Recent data through September 2025 show GDP expanding modestly, supported by strong exports and ongoing investment in key sectors such as technology and renewable energy. The moderation in price pressures has been supported by lower energy costs, a stable euro, and targeted government support.
Consumer sentiment, while still cautious, has shown a small improvement following the announcement of Budget 2026, which places strong emphasis on initiatives to ease financial pressures on households on an ongoing basis while sustaining public investment. The goal is to provide stability for both consumers and businesses alike and preserve confidence in Ireland’s fiscal position.
In markets, Irish equities have mirrored broader European trends, with solid performance in export-driven sectors and continued softness in consumer discretionary stocks. Bond yields remained contained as the ECB reiterated its data-dependent stance, holding its policy rate steady at 3.25%. Political stability and constructive fiscal planning continue to underpin investor sentiment.
Global Market Developments
Globally, the third quarter was marked by continuing monetary policy expectations and geopolitical dynamics. In the U.S., equity markets have experienced alternating bouts of optimism and volatility as investors gauge the timing of potential rate cuts. European markets have shown relative steadiness, supported by moderating inflation and resilient corporate earnings. Emerging markets remain under some pressure from currency fluctuations and capital outflows, while China’s slower-than-expected recovery continues to weigh on global trade sentiment.
Against this backdrop, investors have increasingly rotated toward quality assets and defensive sectors, with a renewed focus on income generation and capital preservation. With it likely that the global focus remains on inflation data, central bank policy paths, and how these influence equity valuations and bond yields heading into 2026, investors will behave in a similar fashion.
Looking Ahead
Looking ahead, Budget 2026, despite commentary to the contrary, we believe sets a constructive domestic framework for the year to come. The Irish economy continues to show resilience amid a complex global backdrop. Budget 2026 reinforces this stability, striking a pragmatic balance between near-term support and long-term sustainability. This approach should help underpin market confidence heading into the new year. Globally, attention will turn to whether major central banks begin easing policy in 2026, and how trade relations and election outcomes in key economies influence risk sentiment. With uncertainty likely to persist, maintaining diversified, quality-oriented portfolios remains crucial.
