Irish economy grows at reduced rate as multinational exports decline

The economy of Ireland is still advancing, although at a slower pace due to the worsening global situation. Data from the Central Statistics Office (CSO) reveals that the country's gross domestic product (GDP) increased by 0.5% in the second quarter when compared to the previous three months.

This figure dropped from an initial estimate of 3.3 percent the previous month and indicates a decline in multinational exports due to a decrease in worldwide demand. Additionally, the GDP decreased by 0.7 percent compared to the corresponding period last year.

According to the most recent national accounts from the CSO, there was a decrease of 4.1 percent in exports during the period from April to June. In contrast, imports saw a slight increase, resulting in a significant decline of 14.4 percent (equivalent to €7 billion) in net exports for the quarter.

Minister of Finance Michael McGrath expressed his acknowledgment of various challenges, despite the recent data indicating ongoing expansion in our national economy. McGrath highlighted that our economy is currently operating at maximum employment levels, and constraints on resources, particularly in the housing and labor sectors, are becoming more restrictive.

"He expressed concern about the decelerating growth in some of our primary trade allies, which could potentially have ripple effects on the export industry in Ireland," he remarked.

According to Mr. McGrath, the decline in GDP over the course of a year can be attributed to a decrease in the export of pharmaceuticals related to Covid, which was caused by the end of the pandemic. Additionally, there was a reduction in exports associated with "contract manufacturing."

The Irish economy remains resilient despite a worsening outlook as it records impressive growth in June.

"As it has been extensively recorded, the fluctuation of multinational production in Ireland is highly unstable. Considering the significant impact of the multinational sector on our economy, it is evident that GDP is an inadequate indicator of the standards of living within the country," he stated.

According to the data provided by the Chief Statistical Officer (CSO), there was a 1% increase in modified domestic demand, which is considered a better indicator of domestic economic activity. Additionally, personal expenditure on goods and services, which plays a crucial role in driving domestic growth, saw a growth of 0.9%.

"In regard to the national economy, I am pleased to observe that adjusted domestic consumption - the measure I prefer to gauge domestic economic activity - expanded steadily during the second quarter of the year. These statistics align with patterns in the job market, as the latest data released last week reveal record-high employment by the end of June," stated Minister McGrath.

The International Monetary Fund (IMF) has increased its predictions for global economic expansion, but has cautioned that the retrieval process is decelerating.

According to the statistics provided by the CSO, the industry sector on a global scale, which is primarily controlled by major pharmaceutical companies, experienced a growth of 3.8 percent in the second quarter. Simultaneously, the information and communication sector witnessed a rise of 2 percent during the same timeframe.

In general, industries predominantly controlled by multinational corporations experienced a 6.2% increase in the quarter and contributed to 53.1% of the total value added in the economy. Meanwhile, all other sectors made up the remaining 46.9% of the share, according to the CSO.