Mr Varadkar, the Minister for Enterprise, was responding concerns that soaring inflation could see European Union economies starting to contract.
He said he could not guarantee that Ireland would not be affected but said he, the Taoiseach and Minister for Finance were “determined…that we avoid going into recession as a consequence of the current crisis”.
“That is possible, but it does mean doubling down on all the things that make Ireland successful economically.”
He said the country must continue to be attractive for jobs and a good place to do business and invest.
Mr Varadkar said Ireland will be able to pay for the cost-of-living crisis and the influx of refugees from Ukraine “because we have a very strong economy”.
“We are estimating that we may even be able to balance the books this year. That’s what the ESRI is saying, notwithstanding the headwinds that we’re facing,” he told reporters at Dublin Zoo.
Mr Varadkar also played down the prospect of fuel shortages or rationing being required next winter.
“We don’t anticipate that being necessary,” he said. “Of course there’s a concern around the supply of diesel potentially over the next couple of months and then gas if the Russians were to cut off gas supplies to Europe.
“But we’re confident that with the contingency measures we have been put in place, that we won’t be in a position to have to ration any energy.”
The Tánaiste said conservation will be encouraged and contingency plans would be made.
Mr Varadkar said he would prefer not to add to speculation on further measures the Government is considering to help households with the soaring cost-of-living.
“You’ll have heard the Taoiseach talking about a few options, you know, for example, extending eligibility for the fuel allowance,” he said.
“You’ll have heard Minister [Eamon] Ryan talking about some of the ideas around differential pricing, making it easier for people to avail of discount rates.
Don’t want to borrow
“But like I say a lot of things are in the mix and a lot of what we can and can’t do will be determined by budgetary position for a start, because we don’t want to use borrowed money to do this.”
On Opposition suggestions that energy companies could be compelled to offer all of their customers their best tariffs, such as their introductory offers, he said: “That is something that Minister Ryan has undertaken to examine.
“You’ll often hear the opposition throw out ideas that sound good on the face of it, when you look into them they’re either illegal or impossible.
“So we’ll have to make sure whether this one is possible and legal, but we will do that in good faith where an idea is proposed we have a responsibility to examine it.”