The Irish economy contracted by 3.3 per cent in gross domestic product (GDP) terms in the first nine months of the year, according to a provisional estimate from the Central Statistics Office (CSO).
The downturn is being linked to statistical distortions in the multinational sector associated with “contract manufacturing”, whereby goods produced in other countries have their profits counted in Irish GDP.
Most forecasters expect the Irish economy to grow by approximately 2 per cent this year in terms of modified domestic demand (MDD), a more accurate measure of the domestic economy.
“GDP is not a useful measure in assessing the living standards of domestic residents, given the outsized role the multinational sector plays in our economy,” Minister for Finance Jack Chambers said recently.
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The latest GDP numbers indicate the economy here grew by 2 per cent in gross domestic product in the third quarter compared with the previous quarter.
Using the early estimate for third quarter, GDP is estimated to have decreased by 1.2 per cent when compared with the same quarter in 2023.
“This moderate growth” was linked to increased activity in the multinational-dominated sectors of industry and information and communication, the CSO said.
The industry sector includes the State’s large pharma sector while the information and communication sector includes many of the world’s big tech players.
GDP contracted for four consecutive quarters last year largely because of a fall-off in multinational exports. This placed the Irish economy in a technical recession, defined as back-to-back quarters of negative growth.
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