The Irish economy grew faster than previously estimated in the third quarter on the back of a rebound in multinational exports, according to official data.
Gross domestic product (GDP) increased by 3.5 per cent between July and September, revised up from the previous estimate of 2 per cent, the Central Statistics Office (CSO) said on Thursday.
The economy is still expected to contract in traditional GDP terms this year largely as a result of volatility and statistical distortions in the multinational sector associated with “contract manufacturing”, whereby goods produced in other countries have their profits counted in Irish GDP.
The CSO noted that over the first nine months of the year headline GDP has decreased by 1.7 per cent compared with the same period in 2023.
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Modified domestic demand, a more accurate measure of domestic activity, however, expanded by 1.3 per cent in the third quarter and was up by 3.1 per cent for first nine months of the year. The CSO also noted that the compensation of employees increased by 3 per cent over the same period.
Minister for Finance Jack Chambers said growth on an annual basis had been broad based in nature with both consumer spending (1.7 per cent) and modified investment (10.4 per cent) making a positive contribution.
“This solid growth is consistent with the strength of our labour market and the robust exchequer figures released yesterday. Taken together these metrics all demonstrate that the economy has performed strongly this year,” he said.
“While today’s figures are encouraging they are, of course, backward looking,” Mr Chambers said.
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“Indeed, the economic outlook has become increasingly uncertain and risks are now clearly titled to the downside with the most pressing risks external in nature. As a small, open and highly globalised economy, Ireland is particularly vulnerable to any deterioration in the external environment,” he said.
US president-elect Donald Trump, who takes office on January 20th, has signalled his intention to impose 25 per cent tariffs on imports from Canada and Mexico, as well as “an additional 10 per cent tariff, above any additional tariffs” on China.
He has previously cited plans for tariffs of 10 to 20 per cent on all goods coming into the US from Europe and elsewhere.
A potential disruption in transatlantic trade from US tariffs has been highlighted to ministers here as significant threat to Ireland’s export-led economy.
The CSO’s figures indicated that output in the highly globalised “industry” sector, which includes the multinational-led pharmaceutical sector, expanded 14 per cent in the third quarter while the information and communication sector posted an increase of 6.3 per cent.
Overall, the combined multinational-dominated elements of the industry and information and communication sectors rose by 9.1 per cent in the quarter.
Output from the more domestic-focused distribution, transport, hotel and restaurants posted a modest decline of 0.3 per cent while activity in the construction sector rose by 3.5 per cent.
Personal spending on goods and services, a key measure of domestic economic activity, fell by 0.2 per cent while net exports of goods and services fell by 26.9 per cent in the third quarter, or by €16.6 billion.
EY Ireland chief economist Loretta O’Sullivan said there were several positives in the latest economic data.
“Particularly encouraging is the fact that Ireland’s multinational and domestic cylinders were both firing. The sectoral breakdown of the results for the third quarter shows that industry and information and communications technology put in a good performance, taking the headline GDP metric back into expansionary territory,” she said.
“More home-focused sectors like construction also expanded and modified domestic demand, which is a proxy for the domestic economy, powered on,” she added.
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