Ireland skyline

Ireland GDP Q3 2019

Ireland: Economy gains traction in Q3

The economy grew 1.7% in quarter-on-quarter and seasonally-adjusted terms in the third quarter, rebounding from a revised 0.1% contraction in the second quarter (previously reported: +0.7% quarter-on-quarter, seasonally adjusted). Meanwhile, in annual terms, economic activity growth ticked up to 5.0% in Q3 from a revised 4.9% in Q2 (previously reported: +5.8 year-on-year). The substantial presence of large multinationals using the country as their base leads to marked volatility from one quarter to the next, thus making it difficult to gauge the true health of the Irish economy.

A positive contribution by net exports drove the upturn. Export growth was stable at 2.4% in Q3, while imports almost halved from the 41.6% expansion logged in Q2 to a 22.5% contraction in Q3 amid falling imports of intellectual property products.

On the domestic side, a marked decline in fixed investment was behind the contraction in domestic demand. Fixed investment shrank 55.3% over the previous quarter in Q3 (Q2: +164.8% qoq s.a.), largely owing to lower levels of intellectual property investment compared to Q2. Meanwhile, private consumption rose at a faster clip in Q3 compared to Q2 (Q3: +0.9% qoq s.a. Q2: +0.7% qoq s.a.), albeit remained relatively muted overall amid downbeat consumer sentiment. Moreover, government spending picked up pace from the previous quarter, growing 1.2% in Q3 (Q2: +1.1% qoq s.a.).

Modified domestic demand—the national account metric developed by the CSO that strips out the more volatile components such as research and development, and aircraft leasing operations—rose 3.6% in quarter-on-quarter, seasonally-adjusted terms in Q3, contrasting the revised 4.2% contraction logged in the second quarter (previously reported: +2.2% qoq s.a.). Thus, in this case, modified demand differs significantly from unadjusted demand, revealing how the presence of large multinationals within the country can dramatically tilt and skew the metrics.

Looking ahead, economic activity is expected to ease next year amid slowing domestic demand and a weak external sector. Household consumption is seen easing while fixed investment growth is expected fall. Downside risks to the outlook stem mainly from Brexit and potential overheating amid a tight labor market and declining spare capacity.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest