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The Irish economy contracted in the first three months of the year – CSO

The Irish economy contracted in the first three months of the year - CSO

Treasury Secretary Michael McGrath. Photo: Gareth Chaney/Collins

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

The early or “flash” estimates indicate that gross domestic product (GDP) fell by an estimated 2.7 percent in the first three months of this year compared to the last three months of 2022.

The size of the economy is still significantly larger than a year ago, according to CSO figures.

Irish GDP figures can be volatile as much of the total reflects financial movements within large multinationals

The result was mainly driven by a decline in the industrial 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) is a more accurate and reliable measure of domestic economic activity in Ireland.

“Last week my department released its spring forecasts as part of the Stability Program Update. Despite inflationary pressures, the Irish economy has proven to be remarkably resilient.

“The labor market continues to do well, with the unemployment rate nearing an all-time low, while consumer spending continues to grow. Incoming data on the domestic economy, namely job numbers, construction activity and tax revenues, point to a solid start to the year.”

While most of the stats here point to a robust economy, the most recent GDP figures come after Monday’s data showed that a two-decade growth in capital services ended in 2021, mainly due to a decline in investment in intangibles like patents .

Capital services for the total economy are down 2.4 percent in 2021, Statistics Netherlands said on Monday.

It was the first drop ever recorded. Data for this range has been collected since 2000.

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

That is precisely the kind of activity that has driven corporate tax receipts here to unprecedented heights in recent years, supporting the state’s strong fiscal position.

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