Ireland’s economic growth surged 7.8pc during the first three months of the year as strong activity in the multinational sector offset a hit to the domestic economy, according to figures released this morning by the Central Statistics Office (CSO).

The level of profits being transferred by multinationals from Ireland has also risen sharply.

Net outflows of multinational profits were €24.5bn in the first quarter of this year – an increase of €8.8bn on the first three months of 2020, said the CSO.

But the data released by the CSO show that personal spending on goods and services sank 5.1pc as Covid restrictions took affect in the first three months of the year.

That figure gives a much clearer view of how Ireland’s domestic economy was hit during the period by the fresh lockdown and continuing restrictions.

There was a 9.9pc contraction in the distribution, transport, hotel and restaurants sectors. The information and communications sector – dominated by multinationals – grew 19.1pc.

Modified Domestic Demand, an important indicator of underlying domestic demand that strips out skewing effects, decreased 2.9pc in the first three months of the year.

While the 7.8pc GDP (Gross Domestic Product) growth for the quarter was noted by the Government, Finance Minister Paschal Donohoe warned that GDP “is not an accurate measure of what’s going on in the Irish economy”.

He said that the increase in GDP in the quarter was “driven by a relatively small number of sectors with, in some cases, the increased activity generating limited domestic employment”.

But the strong performance by the multinationals is still likely to prompt economists to raise their growth forecasts for Ireland’s GDP for 2021.

Davy Stockbrokers said this morning before the CSO figures were released it had pencilled in a 3.5pc decline in Ireland’s GDP for the first quarter. It said if growth occurred, it would likely have to raise its own forecasts for GDP growth for 2021 from 4.8pc to somewhere between 5pc and 6pc.

The latest CSO data shows that exports rose 5.8pc in the first quarter of the year, while imports fell 8.9pc.

The construction sector fell by 23.4pc as the lockdown saw sites close, while the agriculture sector declined 5.2pc.

But real estate activities recorded growth of 6.2pc in the first quarter.

Sectors dominated by multinationals here grew 17.9pc in the first three months compared to the final quarter of 2020, while the non-multinational sectors contracted by 2.1pc.

Gross National Product (GNP) – a measure of economic activity that excludes the profits of multinationals – fell 1pc in the first quarter, driven by increased multinational profit outflows in the period.

The CSO data also shows that Ireland recorded an €18.4bn surplus in its trade with the rest of the world in the first quarter.

Ireland had a trade surplus of €3.4bn with the UK in the first quarter of 2021.

The economy has seen a strong uplift during the second quarter as the lockdown was lifted, restrictions are eased and the Covid vaccination programme continues.