IRELAND’S ECONOMY GREW in the second quarter of this year, according to new figures from the Central Statistics Office.

Ireland’s modified domestic demand, which is a proxy for the domestic economy, grew by 1% relative to the previous quarter.

GDP rose by 0.5 per cent over the quarter but dropped 0.7% on an annual basis. According to the Department of Finance, this is partly due to the volatility of production in the multinational sectors and falling demand for Covid-related pharma exports.

Consumer spending increased by 0.9% in the second quarter of the year.

Multinational-dominated sectors grew by 6.2% in the quarter, with all other sectors increasing by 1.5%.

Exports fell by 4.1% in the second quarter of 2023 while imports increased by 0.1%, leading to a decline in overall net exports of 14.4% (€7.0 billion).

Modified domestic demand is the sum of personal and government consumption and investment, excluding investment in imported IP and aircraft for leasing. It also excludes changes in the value of stocks.

Commenting on the figures, Minister for Finance Michael McGrath said: “As has been well documented, multinational production in Ireland is extremely volatile and, given the outsized role the multinational sector plays in our economy, GDP is clearly not a useful measure of domestic living standards.

“In terms of the domestic economy, I am encouraged to see that Modified Domestic Demand (MDD) – my preferred metric of domestic economic activity – grew at a solid pace in the second quarter of the year. These data are consistent with trends in the labour market.

“While today’s data confirm continued growth in the domestic economy, I am conscious of several headwinds.

Our economy is clearly operating at full-employment and capacity constraints, in both our housing and labour markets, are increasingly binding

“Externally, growth is slowing in some of our main trading partners, and this could have knock-on implications for Irish exports.

“It is against this backdrop that Budget 2024 is being framed. We will, once again, need to strike the right balance: ensuring that budgetary policy is calibrated in a manner which avoids adding to the price pressures in our economy while, at the same time, supporting households and delivering the infrastructure and public services that our society needs.”