Irish economy better than figures show, says think tank

Ireland’s economy is performing better than headline GDP figures suggest, a leading think tank says.

Irish GDP is heavily distorted by the activities of large multinational companies.

That usually leads to an overstatement of the country’s rate of economic growth.

However, the Economic and Social Research and Institute (ESRI) says the opposite is now happening.

In its quarterly economic commentary the ESRI says while the domestic economy has slowed over the course of this year there is “still a relatively robust degree of growth evident”.

Meanwhile, the multinational dominated parts of the economy have slowed, visible in reduced exports and investment.

The think tank expects GDP to fall by almost 3% this year with MDD, a measure of the underlying domestic economy growing by 0.6%

It said: “The most distinct feature of the decline in Ireland’s growth trajectory this year has been the fall-off in exports.”

Pharmaceuticals, by far the largest export sector, has seen exports decline by 6% so far this year.

That is partially due to the normalisation of performance by major global drugs companies which had a surge in sales during the pandemic.

Ireland’s jobs market had recovered strongly since the pandemic and the unemployment rate is now below 5%, which is probably close to technical full employment.

The ESRI said that a recent slight uptick in the unemployment rate likely just reflects a charge in the statistical classification of some Ukrainian migrants.