Ireland's domestic economy did not grow between the second and third quarters of the year as a fall in investment expenditure largely offset growth in consumer spending, Central Statistics Office (CSO) data recently showed.
With Ireland's large multinational sector often distorting gross domestic product (GDP), officials prefer to use modified domestic demand (MDD) to gauge the strength of the economy.
Flat MDD
MDD was flat in the third quarter after growing 0.3% in the second quarter and contracting 0.3% in the first.
"Encouragingly, personal consumer spending increased by 0.7%in the third quarter, broadly in line with pre-pandemic norms and up 2.5% on an annual basis," Finance Minister Michael McGrath said in a statement.
GDP is still the measure used to calculate Ireland's share of activity across the euro zone.
It contracted by 1.9% quarter-on-quarter versus an initial estimate of -1.8%, which contributed to a 0.1% contraction across the bloc.
The GDP decline "reflects, in no small part, the ongoing fall-off in demand for COVID-related pharmaceutical products" produced in Ireland, McGrath said. "We are also seeing a marked softening in global economic conditions."
Domestic Economy
Growth in Ireland's domestic economy has softened in recent months following a sharp bounceback from the COVID-19 pandemic that resulted in MDD growth of 9.5% in 2022, faster than GDP growth in any other euro zone economy.
Unemployment Rates
Unemployment has risen to 4.8% from a near record low of 4.1% in February, with retail sales posting their first annual decline of the year last month and surveys showing growth in the services sector slowing for sixth straight months.
A sharp slowdown in inflation to 2.3% last month should offer some respite.
Before Friday's release, the finance ministry had forecast MDD, which strips out some of the ways multinational operations inflate activity, to grow by 2.2% this year and again in 2024.
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