Irish domestic economy posts strong second quarter growth

DUBLIN (Reuters) – Ireland’s domestic economy grew by 4.3% quarter-on-quarter from April to June, data showed on Friday, as a pick up in investment drove a recovery from a 0.1% decline in the first quarter with consumers also beginning to spend again on services.

           People walk along a street in Dublin© Reuters/CLODAGH KILCOYNE

Modified domestic demand (MDD), which strips out some of the ways Ireland’s large multinational sector distorts measuring economic activity, was 10.6% higher than in the same period in 2021 when the economy was emerging from a strict lockdown.

Gross domestic product (GDP), a broader measure of economic activity, grew by 1.8% on the quarter and was 11.1% higher year-on-year. The government has long cautioned against using this measure as it is routinely inflated by multinational activity.

The domestic economy expanded by 5.8% in 2021. In April the finance ministry cut its forecast for growth this year to 4.2% from the 6.5% it had expected late last year before inflation began to rise sharply.

Finance Minister Paschal Donohoe said last month that the economy was performing in line with those revised expectations, citing tax receipts that have risen to a fresh record level and unemployment that has fallen to two-decade low of 4.3%.

While retail sales have fallen for three straight months to July, Friday’s Central Statistics Office (CSO) data suggested this was partly due to consumers spending more on services after all COVID-19 restrictions were lifted early in the year.

Growth in services expenditure of 3.3% pushed personal spending on both goods and services up 1.8% quarter-on-quarter.

However higher prices are pulling down the real effects of consumption, the CSO said, noting that while consumers spent 12.4% more on goods and services year-on-year, they only got 5.6% more in terms of volume of goods and services.

Inflation hit a near 40-year high of 9.1% in Ireland last month.

Friday’s data also showed that exports grew by 3% in the quarter, while the construction sector expanded by 2.7%.

(Reporting by Padraic Halpin; Editing by Tomasz Janowski, William Maclean)


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