Ireland highly exposed to AI-related U.S. equity price correction, finance ministry says

DUBLIN, July 22 (Reuters) - An AI-related correction in U.S. equity prices could leave Ireland's domestic economy 1.6% weaker within one year due to its close links to the U.S. technology sector, new research published by Ireland's finance ministry on Wednesday found.

• In a central scenario where U.S. equity prices fall by around 10% and recover gradually, investment in Ireland drops 4.5%, exports 2.6% and personal consumption 0.7%.

• Employment growth would be 0.7 percentage points weaker over the first year than it otherwise would have been. The foreign multinational-dominated technology sector currently accounts for just over 6% of total Irish employment.

• The hit to Ireland's public finances could be "significant" given the highly remunerated technology sector accounts for 17% of all income tax collected in Ireland and over 20% of overall corporate tax receipts.

• Under a more severe scenario of a 20% correction in U.S. equity prices, modified domestic demand (MDD) – officials' preferred measure of economic performance – would fall by around 3.25%.

• Ireland is among the advanced economies most exposed to a correction in U.S. technology valuations, the paper said.

• Strong Irish MDD growth in recent quarters has been driven by the AI infrastructure boom, separate research has shown. MDD grew by 4.9% last year.

(Reporting by Padraic Halpin, editing by Sam Tabahriti)