The Irish economy grew by a better-than-expected 12.2 per cent last year despite a severe cost-of-living squeeze and a significant slowdown in the global economy. This was significantly ahead of Government forecasts and made Ireland the fastest-growing economy in Europe once again.
The Central Statistics Office (CSO) published a flash estimate of Gross Domestic Product (GDP) in the fourth quarter of 2022 to coincide with the publication of Eurostat growth figures due out on Tuesday.
“This is the first time that the CSO has published a preliminary estimate of GDP 30 days after the end of the reference quarter,” the agency said.
The figures show GDP, the standard measure of growth, grew by an estimated 3.5 per cent in the final three months of last year compared with the previous quarter.
The growth was driven mainly by “expansion in the manufacturing sector”, the CSO said.
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The manufacturing sector in Ireland is dominated by pharmaceutical firms, which have continued to trade strongly despite the deteriorating international outlook. Pharma products account for over 50 per cent of the Republic’s goods exports.
The fourth quarter figure meant GDP – on an annual basis – is estimated to have increased by 12.2 per cent, when compared with 2021. While this was marginally down on the 13.5 per cent growth recorded in 2021, it is strongest growth figure registered by any euro zone member.
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The full figures will be published on Tuesday.
Goodybody economist Dermot O’Leary said the latest numbers meant Ireland was the fastest growing economy in Europe last year.
“It must be remembered that GDP growth data for Ireland are skewed by multinational activities, some of which is from sources that do not reside in Ireland,” he said.
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“Indeed, the growth in Q4 was driven primarily by expansion in the manufacturing sector according to CSO commentary, which is at odds with the manufacturing Purchasing Managers’ Index (PMI), measuring domestic business activity, which averaged a slightly contractionary reading of 49.6 across the three-month period to December 2022,” Mr O’Leary said.
“The performance in total manufacturing is driven, we suspect, by sectors such as pharmaceuticals and medical devices, which contribute substantively to Ireland’s GDP,” he added.
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Mr O’Leary said modified domestic demand, a measure of domestic economic activity, provided a better depiction of the Ireland’s true economic condition.
“On this measure, we expect growth to fall substantially to 0.7 per cent in 2023, reflecting economic headwinds such as a curtailment in household spending in the face of higher living costs and the eventuality of higher mortgage rates,” he said.
