National Accounts show robust performance of domestic economy despite volatility in MNE output- Ibec

June 02, 2023

Ibec, the group that represents Irish business, notes that today's National Accounts release of Q1 figures for 2023 showed continued growth in the domestic economy, with Modified Domestic Demand up by 2.7% on a quarterly basis despite challenges in the global economy. A quarterly reduction in output among multinational-dominated sectors within industry led to a quarterly fall in GDP of 4.6%.

Ibec economist Hazel Ahern-Flynn said: “The figures released today by the CSO showed continued growth in the domestic economy despite challenges in the global economy. The multinational sectors' output volatility led to a quarterly decrease in GDP growth of 4.6%. However, the timing of changes in output among a small number of multinational firms in a particular quarter can have an outsized impact on the headline GDP figure. In annual terms, the impact on real GDP growth is just -0.2%.

“Modified domestic demand, an alternative measure of the domestic economy which strips out globalisation effects, grew by 2.7% quarter on quarter, demonstrating the robustness of the domestic economy. This growth was driven both by increased consumption among households and growing investment in construction, machinery, and equipment by business. Today’s figures confirm businesses are continuing to invest to meet ongoing demand, with construction, financial and insurance activities, and ICT sectors all showing strong quarterly growth of 12%, 8% and 4% respectively. Considering the persistent challenges regarding housing and accommodation, the growth of construction output in the early months of the year is welcomed.

“Quarterly growth of 1.7% in personal consumption is also a welcome sign of the relatively strong position of Irish households amid record employment and despite cost-of-living pressures. Even accounting for inflation, real consumption is now 2.7% above pre-pandemic levels. Today’s figures also confirm that tourism and travel into Ireland are normalising back toward their pre-pandemic level. Looking to the future, leading indicators for the second quarter, including April’s tax receipts, confirm the economy is performing well, with high employment and business activity continuing to deliver resources to the state.”