GDP in Ireland
Ireland - GDP
Statistical noise causes GDP to record largest drop on record in Q4
GDP dropped 5.4% on a seasonally-adjusted quarter-on-quarter basis in the fourth quarter, contrasting the 1.2% expansion logged in the third quarter and marking the worst reading on record. That said, the poor reading was likely driven by statistical noise. Modified final domestic demand, a metric which strips out distortions arising from multinational activity, rose by 1.3% in seasonally-adjusted quarter-on-quarter terms.
The weaker reading was largely driven by an acceleration in imports of goods and services, which grew 22.7% in Q4 (Q3: +4.3% s.a. qoq) due to significant imports of intellectual property by multinational firms. Meanwhile, exports of goods and services growth sped up to 1.3% in Q4 (Q3: +0.6% s.a. qoq).
This said, the quarter’s growth in modified final domestic demand did mark a slowdown from the previous quarter (Q3: +2.3% s.a. qoq). Moreover, private consumption contracted 0.3% in Q4, marking the worst result since Q1 2021 (Q3: +0.3% s.a. qoq). Therefore, it appears that there was some slowdown in underlying economic activity amid the disruption caused by the Omicron Covid-19 variant and related restrictions.
Government spending, meanwhile, bounced back, growing 0.9% in Q4 (Q3: -0.1% s.a. qoq). Meanwhile, fixed investment rebounded hugely, growing 76.5% in Q4, contrasting the 1.0% contraction logged in the prior quarter.
On an annual basis, economic growth slowed markedly to 9.6% in Q4, following the previous period's 11.3% expansion. Q4's reading marked the slowest expansion since Q4 2020.
Looking ahead to Q1 2022, underlying economic activity is likely improving. A recent fall in Covid-19 cases allowed the government to announce the end to most restrictions in January. This should mean an increase in private consumption activity. That said, red-hot inflation is likely to somewhat limit consumers’ abilities to spend, dampening underlying economic momentum.
FocusEconomics panelists project GDP to expand 5.6% in 2022, which is unchanged from last month’s forecast, and 3.9% in 2023.
Ireland - GDP Data
|Economic Growth (GDP, annual variation in %)||25.2||3.7||8.1||8.2||5.6|
5 years of economic forecasts for more than 30 economic indicators.
Ireland GDP Chart
Source: Central Statistics Office Ireland.
|Bond Yield||-0.09||0.27 %||Jan 01|
|Exchange Rate||1.12||0.65 %||Dec 31|
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