THE IRISH GROSS domestic product, the metric used to measure the economy, fell by 4.6% in the first quarter of 2023.
The decrease is 1.9% more than what the Central Statistics Office (CSO) estimated earlier this year.
The fall in Gross Domestic Product (GDP) is attributed to a decrease in exports and “globalised activities of the multinational sector”, according to Minister for Finance Michael McGrath.
The CSO found the national net exports fell by 1.9% in the first four months of this year, leading to a loss of €900 million for the state.
Additionally, the multinational sector contracted by over 15% in the first quarter, according to the CSO data published today, which was a key factor that lead to the decrease in the GDP.
However the Modified Domestic Demand (MDD), a metric more commonly used in Ireland as it excludes the economic activities of multinationals, increased by 2.7% in the first quarter of this year.
McGrath “welcomed” the increase in MDD and attributed consumerism, growth in employment and the investment by the government into cost of living measures, such as energy, to the increase.
The Minister said: “The 2.7 per cent quarterly expansion was broad-based, with both consumer and investment spending robust in the quarter. ”
The national unemployment rate reached a reached its lowest point in more than 20 years of 3.9% in May.
CSO found that personal spending on goods and services increased by 1.7%, and exceeded the peak pre-pandemic level of personal spending recorded in 2019.
McGrath added he was “conscious” of the fall in GDP and that multinational production can be “extremely volatile” during the first few months of the year, based on patterns seen over the “recent years”.
“…GDP is clearly not a useful measure of the living standards of domestic residents,” the Minister added.
Gross National Profit (GNP), which measures economic activity that excludes the profits of multinationals, is expected to decrease by 8.0% in the first quarter according to the CSO’s Assistant Director General with responsibility for Economic Statistics, Jennifer Banim.
Banim added: “Overall, multinational-dominated sectors declined by 15.7% in the quarter, the largest decline since Q1 2017, and these sectors accounted for 53.0% of total value added in the economy, compared with a 47.0% share for all other sectors.”
Domestic economic activity increase for almost all sectors in the first quarter, most notably the construction sector (12.0% growth), the arts and entertainment sector (15.3% growth) and the agriculture, forestry and fishing sector (15.9% growth).
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