The euro area’s unexpected growth in the final quarter of 2022 is down to Ireland’s outsized expansion in the period, according to economists.
“The Irish economy, propelled by the presence of multinational corporations, expanded by 3.5% contributing 0.1 percentage points to the euro-area figure and tipping the balance such that the bloc expanded overall,” said Jamie Rush, chief European economist at Bloomberg Economics.
Before Tuesday’s data, economists had predicted a 0.1% drop in euro-area gross domestic product that then ended up showing a 0.1% expansion. Irish GDP figures have long been regarded as painting an overly positive view of the economy’s performance due to the disproportionate role of global heavyweights such as Alphabet’s Google, Twitter and Pfizer. The government in Dublin itself prefers to use other metrics to track growth.
🇪🇺 Euro area Q4 real GDP growth = +0.12% QoQ— Frederik Ducrozet (@fwred) January 31, 2023
🇮🇪 Without Ireland = -0.02% QoQ pic.twitter.com/lKfIcVU3n2
“Euro-zone growth would have fallen back to 0% if Ireland wasn’t included,” said Bert Colijn, a senior economist at ING.