The country’s gross domestic product fell by 2.7% on a quarterly basis in the first quarter of 2023 but stood 6.4% higher than a year ago, a preliminary estimate reading from the Central Statistics Office shows today.
The Government has long cautioned against using GDP to accurately measure economic growth as it is routinely inflated by multinational activity.
But its preferred measure, modified domestic demand, is not included in the early estimates from the CSO.
The CSO said the first quarter fall was driven mainly by a drop in the industry sector from very high levels in the second half of 2022.
GDP increased by 12% in 2022, while modified domestic demand rose by 8.2% for the year as a whole.
The CSO said its preliminary GDP estimate is based on forecasting and data sources that are incomplete compared with those used for compiling GDP in its Quarterly National Accounts.
These will be published in early June.
The Minister for Finance Michael McGrath said today that the drop in quarterly GDP was likely related to the globalised activities of multinational corporations.
“Production and exports are notoriously volatile on a quarter basis,” he stated.
The Minister said the CSO figures will be incorporated in Eurostat’s flash GDP estimates for the EU and euro area, due to be published tomorrow.
“The publication of more timely data serves as a useful and early complement to the more detailed release due out in a month’s time,” he said.
“It is important to note that these are first estimates of GDP, which can often be subject to non-trivial revisions, as was the case last quarter,” he added.
The Department of Finance last week published its spring forecasts as part of the Stability Programme Update.
Michael McGrath said that despite inflationary pressures, Ireland’s economy has proven to be remarkably resilient.
“The labour market continues to perform strongly, with an unemployment rate close to record lows, while consumer spending continues to expand,” he said.
“Incoming data relating to the domestic economy, namely jobs numbers, construction activity, and tax receipts point to a solid start to the year,” he added.
Looking ahead, the Minister said that as inflationary pressure eases, real household disposable income is set to recover and will support consumer spending growth.
The fading of the energy price shock should also support higher capital spending by firms, he added.