Ireland: GDP growth slows in Q2, but underlying momentum improves
September 2, 2021
GDP growth moderated to 6.3% on a seasonally-adjusted quarter-on-quarter basis in the second quarter, from 8.7% in the first quarter. That said, underlying momentum strengthened sharply, with modified total domestic demand—a metric which aims to exclude the impact of transactions by large multinationals—surging as Covid-19 restrictions were lifted.
Household spending increased 12.6% in the second quarter, which contrasted the first quarter's 5.7% contraction. Public consumption rebounded, growing 0.8% in Q2 (Q1: -1.7% s.a. qoq). Gross fixed investment rebounded, growing 5.8% in Q2, contrasting the 25.7% contraction in the prior quarter.
Exports of goods and services growth picked up to 6.4% in Q2 (Q1: +2.6% s.a. qoq). In addition, imports of goods and services bounced back, growing 5.4% in Q2 (Q1: -15.3% s.a. qoq).
On an annual basis, economic growth improved to 21.6% in Q2, following the previous period's 11.2% expansion. Q2's reading marked the best result since Q4 2015.
Looking ahead to H2, the economy is seen continuing to expand at a quick pace, as the lifting of restrictive measures releases pent-up demand and buoys domestic activity. Moreover, exports should gain steam in line with the recovery in key trading partners. However, trade barriers with the UK and the possible prolongation of Covid-19 restrictions cloud the outlook.