The Irish economy grew at a more modest rate of 1.8 per cent in the second quarter of 2022, after a particularly strong first quarter. On an annual basis, gross domestic product (GDP), the standard measure of growth internationally, was up by more than 11 per cent, pointing to a strong bounce back from the pandemic period. This was also nearly three times the euro area average.
The latest quarterly national accounts from the Central Statistics Office (CSO) show the economy is continuing to exhibit strong growth despite the international headwinds.
The latest figures show modified domestic demand, a better indicator of domestic conditions, rose by 4.3 per cent quarter-on-quarter while personal spending on goods and services rose by 1.8 per cent.
The squeeze on real incomes from higher energy costs is expected to curtail consumption in the coming months while a deepening of Europe’s energy crisis could also pitch the bloc’s economy into recession, a scenario that may curb exports.
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While economic activity increased for many of the sectors focused on the domestic market, there was a mixed picture overall, the CSO said.
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The construction sector expanded by 2.7 per cent in the quarter while the distribution, transport, hotels and restaurants sector increased by 1.5 per cent quarter-on-quarter.
However, there were declines in professional, administrative and support activities, finance and insurance, and agriculture forestry and fishing in the quarter of 0.3 per cent, 0.4 per cent and 0.3 per cent respectively.
The multinational-dominated “industry” sector, which includes big pharma, grew by 5 per cent while the information and communication sector increased by 4.9 per cent over the same period.
Overall, multinational-dominated sectors grew by 6 per cent in the quarter and accounted for 54.8 per cent of total value added in the economy, compared with a 45.2 per cent share for all other sectors.
The latest figures show net exports of goods and services fell by 1.8 per cent or €900 million in the second quarter.
“Clearly, circumstances are changing rapidly given the global headwinds, but the Irish economy has entered this tougher period with significant momentum,” Goodbody economist Dermot O’Leary said.
Economist with employers’ group Ibec, Hazel Ahern-Flynn, said: “Today’s strong figures from the National Accounts confirm that the business sector as a whole is still generating sufficient revenue to allow Government the headroom to provide a robust response to the ongoing energy crisis. As some businesses are currently facing energy costs four to five times higher than a year ago, targeted supports are urgently needed for those businesses worst impacted.”
