Multinationals cushion Ireland from Covid hit but domestic economy still shrinks by 5.4%

Pharma and IT firms based here raise GDP but, domestically, the pain is unevenly distributed across economy 

CSO

Ireland is so far the only country in Europe whose economy has grown during the Covid-19 economic storm, thanks to the multinationals, but alternative measures more accurately reflect the pain for Irish households,CSO figures confirm. 

On the GDP measure, the economy grew by a remarkable 3.4% thanks to exports of the many pharma and IT multinationals based here, but another much more realistic measure, based on domestic demand, showed the economy slumped by 5.4%.

For the second time in 10 years, the multinationals played a big role in cushioning the Irish economy from the worst effects of a global crisis, said Chris Sibley, senior statistician at the CSO.

The available figures so far suggest Ireland is the only country whose economy expanded in 2020, based on the GDP measure, Mr Sibley said. 

However, the CSO figures confirm the uneven distribution of the pain across the economy, with the industries most exposed to the lockdowns, including transport and hospitality and construction, contracting sharply, while the exporting multinationals boomed. 

The CSO said distribution, transport, hotels, and restaurants shrank by 16.7%, while construction, which was also shuttered for long periods last year, contracted by 12.7%. 

"Growth continued in the more globalised sectors with industry increasing by 15.2%, while the information and communication sector increased by 14.3% in the year," the CSO said. 

It meant that in GDP terms the multinationals now account for over half of the Irish economy.  

Research published last month by Patrick Honohan, a former governor at the Central Bank, suggested Ireland is the 12th most prosperous economy in the EU 27, not its wealthiest when a different and possibly more appropriate measure than GDP is used.