Ireland poised for 'blow-out economic growth' if Covid variants don't disrupt reopening

The success of the foreign-owned chemical, pharma, and IT firms was reflected in the export numbers.

Ireland is poised for a blow out economic growth this year if the pharma and IT exporting boom continues and if the Covid variants don't disrupt the reopening of the domestic economy, leading economists have predicted.          

Analysts said Ireland's economy could post double-digit growth and mark the fastest expansion of any advanced country in the world after the CSO unveiled figures that showed that the exports of multinationals drove a huge increase in GDP in the first quarter compared with the last three months of 2020. 

However, the figures starkly showed the winners and losers of the Covid economic crisis, with households working for multinationals likely to be the winners in economic terms from the pandemic, while many parts of the domestic economy were mired in recession amid one of Europe's strictest lockdowns. 

Ireland's GDP growth of 7.8% GDP in the quarter was the fastest in EU and was again down to the exports by multinationals. Other measures that more accurately reflect the experience of a many households in the domestic economic, with GNP down by 1% and modified domestic demand sliding by almost 3%.                                   

Economist Jim Power said every piece of economic data out of Ireland, including this week's exchequer returns, showed the multinational side of the economy was booming. The success of the foreign-owned chemical, pharma, and IT firms was reflected in the export numbers, while retail, construction, and personal services such as hairdressing have been "absolutely devastated", Mr Power said. 

He said he expected double-digit growth for the year if the domestic economic recovery gets underway. "If you work in foreign direct investment, in the public sector, in financial services, in professional services, you have had a very good Covid crisis", in economic terms, he said. 

"If you work in tourism, hospitality, or personal services, it has been a nightmare the past 12 months".                    

Conall Mac Coille, chief economist at Davy, said there was a "definitely a possibility" Ireland will post  double-digit growth this year, though "indigenous output" in the quarter was still well below pre-pandemic levels. Ireland had quite strict restrictions and double-digit growth was possible "although there is a lot of work to be done for that to become a reality on the ground", Mr Mac Coille said.