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SME Profitability in an Adverse Macroeconomic Environment

Author

Listed:
  • Mahony, Michael

    (Central Bank of Ireland)

  • Adhikari, Tamanna

    (Central Bank of Ireland)

Abstract

Irish SMEs are expected to continue posting positive and stable profit margins under the central scenario for the domestic economy. In an adverse scenario which assumes a sharp deterioration in the global and domestic macro-financial environment driven by heightened geoeconomic tensions, SME profit margins fall sharply. Sectors with the greatest trade exposures suffer the largest drop in profitability. While the adverse scenario projects a large increase in the proportion of loss-making SMEs, the number of firms entering financial distress is more modest. This provides confidence in the resilience of Irish SMEs, even under stress conditions.

Suggested Citation

  • Mahony, Michael & Adhikari, Tamanna, 2025. "SME Profitability in an Adverse Macroeconomic Environment," Central Bank Staff Insights 8/SI/25, Central Bank of Ireland.
    • Handle: RePEc:cbi:stafin:8/si/25
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    File URL: https://www.centralbank.ie/publication/research-publications/staff-insights/sme-profitability-in-an-adverse-macroeconomic-environment
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