Irish economic data is hard to interpret at the best of times and the Gross Domestic Product (GDP) figures published yesterday are particularly prone to distortion. Yet they do suggest that growth in the multinational sector is slowing.
The figures showed a 1.3 per cent fall in GDP in the final quarter of last year, compared to the previous quarter. While there is no breakdown of the data – this will come later – the Central Statistics Office (CSO) said that a fall-off in the multinational sector was largely responsible.
While there is a focus on the risks from the new US president, IDA figures show a fall-off in new job commitments was already under way last year. An economic review from IBEC this week, meanwhile, pointed out that total employment in the multinational sector has been flat for the last two years, having increased by about 15,000 new jobs annually since 2014 on average.
Multinationals continued producing through the pandemic and the pharmaceutical sector in particular thrived. A fall-off followed in 2023 and then output from the sector recovered – so-called contract manufacturing, where goods are processed overseas but counted in Irish data complicated the analysis.
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For the full year 2024, GDP is just 0.3 per cent ahead of the previous year. Some slowdown is inevitable given the pace of growth and investment since the middle of the last decade. And the domestic sectors of the economy appear to remain reasonably robust. The hope would be that they can take over as the growth engine.
However, a tricky period of economic management lies ahead. While the focus may be on the US, the underlying issues of a housing crisis and poor infrastructure delivery already appear to have slowed inward investment. They must be tackled to underpin future investment.
There will be much time spent on planning for a Trump presidency, but tackling the issues within Ireland’s control remains vital. Investors have lost confidence in Ireland’s ability to deliver in key areas and action is needed to address this.
