THE MINISTER FOR Finance has labelled the first three months of the year as a “weak” economic quarter despite a 10.8% growth in GDP.

New figures from the CSO show that GDP increased by 10.8%, though personal spending on goods and services decreased by 0.7%.

Modified Domestic Demand, which is a measure encompassing personal, government and investment spending, decreased by 1%.

Minister Paschal Donohue said that the growth in GDP was in part a ‘washing-out’ of “some of the one-off factors that led to the unusual negative quarter at the end of last year”.

“It is important also to put these volatile figures into context. GDP is not an accurate measure of what is going on in the domestic economy, given the size of the multinational sector,” the minister said.

He said the figures from the CSO confirmed a “a weak first quarter for the domestic economy”, attributing it to the Omicron wave of Covid-19, inflation, and the war in Ukraine.

Consumer spending, which was down 0.7%, was affected by rising prices, especially for energy.

GNP, the value of goods and services that the country produces, contracted slightly by 0.4%, according to the CSO.

“Today’s release comes at a time of unprecedented geopolitical instability and uncertainty. The war and the subsequent waves of economic and financial sanctions represents a large ‘supply-side’ shock to the global economy,” Donohue said.

“As a result, inflationary pressures have risen sharply, with the annual rate of inflation in May estimated at a multi-decade high of 8.2% on the back of sharp increases in energy prices.”

He said that “whilst the Government will continue working to minimise the fall-out on those who are least-equipped to respond, resources are limited and we cannot cushion households and businesses from the entire impact of the current shock”.

“The broad economic and fiscal parameters for Budget 2023 will be presented in the Summer Economic Statement. Once again the SES will take place against a backdrop of extraordinary economic challenges.

“However the strength of our labour market and continued improvements in the public finances confirm that we approach the current challenges from a position of strength.

“In calibrating how we respond to the current challenges, it is important that we strike the right balance and ensure policy doesn’t inadvertently add further inflationary pressures into the system.”