Irish economy shrank in first three months of the year – CSO

Finance Minister Michael McGrath. Photo: Gareth Chaney/Collins

The overall size of the Irish economy declined in the first three months of this year, new figures from the Central Statistics Office (CSO) show.

The early or ‘flash’ estimates indicate that gross domestic product (GDP) fell by an estimated 2.7pc in the first three months of this year compared with the last three months of 2022.

The size of the economy is still significantly bigger than it was a year ago, the numbers from the CSO show.

Irish GDP figures can be volatile because so much of the total reflects financial movements within big multinationals

The result was driven mainly by a fall in the industry sector from very high levels in the second half of 2022, the CSO said.

Finance Minister Michael McGrath said the CSO’s measurement of Modified Domestic Demand (MDD) provides a more accurate and reliable measure for domestic economic activity in Ireland.

“Last week, my department published its spring forecasts as part of the Stability Programme Update. Despite inflationary pressures, Ireland’s economy has proven to be remarkably resilient.

"The labour market continues to perform strongly, with an unemployment rate close to record lows, while consumer spending continues to expand. Incoming data relating to the domestic economy, namely jobs numbers, construction activity, and tax receipts point to a solid start to the year.”

While most statistics do point to a robust economy here, the latest GDP figures come after data on Monday showed a two-decade-long run of growth in capital services ended in 2021, due mainly to a fall in investment in intangible assets such as patents.

Capital services for the total economy fell by 2.4pc in 2021, the Central Statistics Office said on Monday.

It was the first decrease on record. Data for this series has been collected since 2000.

Capital services measure the flow of output from the use of physical assets such as factories or aircraft and intellectual property such as patents.

That is exactly the kinds of activities that have driven corporate tax receipts here to unprecedented levels in recent years, underpinning the State’s strong budgetary position.