Ireland: GDP growth improves in the third quarter
GDP growth accelerated marginally to 2.3% on a seasonally adjusted quarter-on-quarter basis in the third quarter, from 2.2% in the second quarter.
However, growth was driven entirely by the multinational sector, which expanded 2.5%; the indigenous sector contracted 0.1%.
Looking at the expenditure breakdown, private consumption growth softened to 0.3% s.a. qoq in Q3 from 2.2% in Q2. Government spending fell at a more moderate pace of 0.3% in Q3 (Q2: -0.6% s.a. qoq). Fixed investment growth improved to 91.8% in Q3, from the 20.2% increase recorded in the previous quarter.
On the external front, exports of goods and services increased 4.8% on a s.a. qoq in the third quarter, which was above the second quarter’s 3.2% expansion. In addition, imports of goods and services growth sped up to 27.0% in Q3 (Q2: +5.9% s.a. qoq).
On an annual basis, economic growth moderated to 10.9% in Q3, from the previous quarter’s 12.4% increase. Q3’s reading marked the slowest growth since Q3 2021.
The better-than-expected GDP reading led several of our panelists to upgrade their forecast for growth in 2022. However, growth is expected to slow in the coming quarters, with all of our panelists penciling in a contraction in Q4 and lower growth rates in 2023 compared to 2022 so far. Although multinational balance sheet movements will continue to distort GDP readings and make them volatile, the non-multinational sector is already showing signs of slowing under the weight of rising interest rates and elevated inflation.