Top Stories
Irish economy shrank 1% in first three months q/q
Irish economy shrank 1% in first three months q/q
Published by Jessica Weisman-Pitts
Posted on June 3, 2022
Global Banking and Finance Review
Company
Published by Jessica Weisman-Pitts
Posted on June 3, 2022
DUBLIN (Reuters) – Ireland’s domestic economy shrank by 1% quarter-on-quarter in the first three months of the year following falls in personal and government spending during a period when the economy was mostly out of COVID lockdowns, data showed on Friday.
Gross domestic product (GDP), a broader measure of economic activity, grew by 10.8% on the quarter. The government has long cautioned against using this measure due to the ways Ireland’s large multinational sector can distort it.
Officials instead use modified domestic demand (MDD) – which strips out some of those distorting factors. That was 11% higher that the same period in 2021 when the economy was in a strict lockdown.
The Central Statistics Office (CSO) said growth of 14.1% in the multinational dominated sectors drove virtually all of the jump in GDP, which followed a quarterly fall of 6.2% in the often fluctuating series during the final three months of 2021.
Lower car sales helped drag personal spending on goods and services down 0.7%, while government spending fell 0.4% as fewer public funds were needed to support the economy as it quickly emerged from a COVID-19 lockdown at the end of January.
Ireland’s finance ministry in April cut its MDD forecast for 2022 to 4.2% from 6.5%, expecting the impact of the war in Ukraine to slow rather than stop growth as the year progressed. Modified domestic demand expanded by 6.5% last year.
While consumer confidence has fallen sharply for four consecutive months and inflation has climbed to an almost 40-year high of 8.2%, other more recent data suggests the squeeze on incomes has yet to hit consumer spending.
Retail sales rose by 3.8% month-on-month in April while data on Thursday showed that tax revenues were 27% higher in the first five months of the year versus the same period of 2021 with income tax, corporate receipts and VAT all up sharply.
Unemployment has also returned to its pre-pandemic level of 4.7%.
(Reporting by Padraic Halpin; Editing by Toby Chopra and Kim Coghill)
