Ireland's GDP contracts in final three months as exports engine splutters

The domestic economy is nonetheless still likely to be in better health than the GDP numbers suggest

The easing of global inflation and interest rates could help support growth this year. 

The size of the economy in terms of GDP shrunk in the final three months of the year as the once reliable growth engine of the multinationals spluttered, but the domestic economy is nonetheless still likely to be growing slightly and not contracting.  

The Central Statistics Office said its preliminary figures show GDP contracted by 0.7% in the final quarter from the previous three months, and the size of the economy was 3.4% smaller than in the same period in 2022, "driven mainly by decreases in the multinational dominated sectors". 

On an annual basis, GDP for 2023 fell 1.9% from 2022, the CSO said. 

Big investments by multinationals and their exports and accounting have in the past delivered outsized spurts to Irish economic growth figures when measured by GDP. That pattern was disrupted last year when the huge uplift of pharma exports during the covid years faded, while huge investments that had boosted GDP in earlier years were not repeated in 2023.     

Other more frequent indicators such as the booming Government tax receipts and employment numbers suggest the domestic economy is in better health than the GDP figures suggest. The

Economic and Social Research Institute (ESRI) forecast on Friday that Modified Domestic Demand, an alternative measure, grew by 2.5% in November from a year earlier. 

The exchequer returns and labour markets were "very strong", but following covid there was a period of more moderate economic growth, said Professor Kieran McQuinn at the ESRI. The easing of global inflation and interest rates could help support growth this year, he said.