Ireland: Economy grows at softest pace since Q4 2020 in Q3
Economic growth waned in the third quarter, with GDP increasing 0.9% on a seasonally-adjusted quarter-on-quarter basis (Q2: +5.2% s.a. qoq). Q3’s reading marked the slowest expansion since Q4 2020. Moreover, underlying momentum also seemed to weaken, with modified total domestic demand—a metric which aims to exclude the impact of transactions by large multinationals—slowing substantially.
The downturn was driven by weakening private consumption, fixed investment and exports. Household spending growth slowed to 0.5% in seasonally-adjusted quarter-on-quarter terms in Q3 following a 14.5% expansion in Q2. Meanwhile, fixed investment worsened, contracting 3.8% in Q3 and contrasting the 4.8% expansion logged in the prior quarter. More positively, government spending accelerated to a 0.8% increase in Q3 (Q2: +0.5% s.a. qoq).
On the external front, growth in exports of goods and services fell to 1.3% in Q3, marking the worst reading since Q2 2020 (Q2: +4.9% s.a. qoq). In addition, growth in imports of goods and services moderated to 4.5% in Q3 (Q2: +5.7% s.a. qoq).
On an annual basis, economic growth moderated to 11.4% in Q3, down from the previous quarter’s 21.1% expansion. Q3’s reading marked the worst print since Q4 2020.
Looking ahead to Q4, the economy will likely be weighed on by rising Covid-19 cases amid the arrival of the Omicron variant, which forced the reintroduction of fresh restrictions in November and December. Moreover, elevated inflation is likely to further take the edge off momentum.