Overseas Investment Drives Surge in Irish GDP Growth
Ireland’s economy expanded sharply in the first three months of the year, with net exports surging even as the domestic sector stagnated.
GDP grew 7.8% in the period from the start of January to the end of March compared to the fourth quarter of 2020, the Central Statistics Office said. The economy expanded 11.8% versus a year ago. That would make Ireland one of the fastest growing economies in the EU at a time when the pandemic has hit growth across the bloc.
The GDP growth was “driven by a relatively small number of sectors with, in some cases, the increased activity generating limited domestic employment,” finance minister Paschal Donohoe said in an emailed statement. “It is for this reason that I have often said that GDP is not an accurate measure of what’s going on in the Irish economy,” he added.
Most of that growth came from multinational dominated sectors, which grew 17.9% compared with a year ago, CSO assistant director general for economic statistics Jennifer Banim said in a statement.
Non-multinational sectors declined 2.1% in the quarter. The growth came even as the Irish economy was effectively locked down by coronavirus restrictions between January and March. Modified domestic demand, which is seen as a better measure of the day-to-day economy on the ground, fell 5% year-on-year.
This is not the first time Ireland’s GDP growth has been skewed by multinational companies operating in the country. The economy grew 26% in 2015, driven in part by companies domiciling in the country for tax reasons.
©2021 Bloomberg L.P.