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THE IRISH ECONOMY is continuing to grow despite a contraction in Gross Domestic Product (GDP) this year.
In its quarterly economic commentary report published today, the Economic & Social Research Institute (ESRI) said that while the underlying Irish economy continues to grow, external sources of growth are slowing.
Exports and investment levels in the domestic economy have registered negative growth rates in recent quarters, the ESRI said, mainly due to the slowdown in multinational enterprise-related activities.
A report by the ESRI in October predicted that GDP would decline this year by 1.6%. However, it now expects GDP, which is very heavily influenced by the multinational enterprise sector, to contract this year by 2.7%.
This is the first episode of negative GDP growth in Ireland since 2012.
Despite this, the ESRI has said modified domestic demand (MDD), a metric more commonly used in Ireland as it excludes the economic activities of multinationals, is set to increase by 0.6% this year. The ESRI had predicted in October that the MDD would increase by 1.8% this year.
MDD is expected to grow at an average of 2% next year.
In the past, GDP has generally tended to overstate the degree of growth in the domestic economy. In the present case, however, it actually understates the degree of activity in the domestic economy, the ESRI said.
Meanwhile, the ESRI has said overall inflation is beginning to slow, mainly due to the fall in energy prices.
It said inflation in non-energy related items has proven to be stubborn, but with the fall in energy prices a slowdown is expected here too.
The ESRI still expects the Consumer Price Index (CPI) to increase by 6.4% this year, and 2.9% next year.
The Institute noted that its forecast for 2023 represents an increase in its previous forecasts of inflation as rates have not declined as rapidly as it previously expected.
Ireland’s labour market is continuing to perform robustly, with the ESRI saying this underscores the resilience of the underlying economy.
Employment levels are currently at a historical high. In the second quarter of this year, there was an employment rate of 74.2% among people aged 15-64, according to the Central Statistics Office.
The ESRI said that while unemployment has increased since the summer, this reflects an increase in the labour force rather than any sustained fall in employment or weakening in economic activity.
Looking ahead, the ESRI said the Irish economy is set to grow at a more modest pace. It said this relfects the inevitable slowdown in the performance of key multinational sectors such as pharma and the unwinding of savings built up during the Covid-19 pandemic.
“Cost of living challenges have put pressure on many households over the past number of years. In recent months, we have begun to see inflation moderate on the back of energy price declines, and we expect this to continue in 2023,” report author Dr Conor O’Toole of the ESRI said.
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Economic growth is always aplauded as a good thing but it’s absoloutely not. It’s fuelled by greed and overconsumption.
It’s morally, ethically and ecologically unsustainable. It means higher prices and workers thinking that needing two jobs to survive is acceptable. It means kids at creche all day hardly ever seeing their parents. We need economic stability. We need economic sustainability.
@Dissasociated Follower: you make me proud to be a capitalist lol
@Dissasociated Follower: After the next recession I hope whoever is in power concentrates on building Irish industries and companies instead of multinationals. Theyre creating a lot of problems, from concentrating wealth in a few urban locations to no one wanting to do apprenticeships anymore.
@Dave Callaghan: if its not trickling down fast enough get closer to the well.
@brian o’leary: What happens when the well run’s dry? Do you think Twitter Facebook Phizer etc are going to stay here for ever?
@Dave Callaghan: “After the next recession I hope whoever is in power concentrates on building Irish industries and companies instead of multinationals. ”
How did those in charge concentrate on “building Multinationals”? Pretty sure those companies were already built and established.
@Podge: The operative word being ”concentrates”
@Dave Callaghan: nobody wants to do apprenticeships because the conditions are atrocious compared to someone working in a multinational
@Martin Mongan: atrocious conditions??? Good money to be made as a tradesman
Ceo of fai got 23% payrise due to general sectaries of departments getting it..
What has been the average payrise in the public sector since 2020, I know I got 6% payrise in my factory job
@hi from heaven: FAI are still rotten to the core, face change but the scam continues.
yet for all this money and wealth, we have a third world health service, third world public transport service, 13,000 including 4,000 children living long term in hotel rooms, lawlessness and public order gone to the dogs, a housing crisis, and an incompetent government who are only interested in serving their own needs and agendas over the needs of the electorate.
Leprechaun economics.
The housing crisis has come home to roost
Say that to the kids that got stabbed under ffg , well done mOng0
So when GDP contracts we swap to the “normally used” MDD, which very few people will have heard of, but shows a positive. There should an updated book on leprechaun economics at this stage.
@Paul Fahey: as ever, just The Journal looking for a negative spin, I guess “Measurement widely held to be unhelpful in Irish context proven to be unhelpful in Irish context” just wouldn’t pop as clickbait.
@Paul Fahey: ? One is national only and the other isn’t. Both are used at all times.
Must be embarrassing to make a comment trying to make out you know something about it only to demonstrate how clueless you are.
Maybe take a few minutes and learn how it works?
PEOPLE PLEASE STOP FEEDING THE TROLL, PETER MURRAY.
Its a hard read this hour of the morning
@Denis Rathsallagh Brady: I’m just stating facts and will continue to do so :)
@Alan B:
Nice one
@Murray peter: and when do you plan on stating facts rather than a warped opinion influenced by whatever muppet you bob your head along to on Facebook and Tiktok in the mornings while you try and fail repeatedly to spoon cornflakes into your mouth before heading off back to bed because its easier to take from society than actually contribute?
@Podge: you seem very triggered
@Murray peter: Not at all. And sorry for the delay on my reply, some of us actually work for a living.
@Podge: you are extremely triggered
@Murray peter: You’re just an unemployed keyboard troll who has about 5 accounts here so you can talk to yourself and think you make out yourself impressive.
Do me a favour….
I’m talking to the peter Murray TR0ll
@Stephen Flood: so needy
@Murray peter: Says the sponge that has his mum wake him in the morning
@Podge: before crawling back to the basement for another few hours kip.
@Podge: I appear to be living rent free in your head lol
FG are really playing an absolute blinder, I couldn’t be prouder of all the true patriots in FG :)
@Murray peter: Agreed – I’m so thankful we didn’t end up with SF in power – imagine If the rest of us were unemployed like yourself – who would pay for your cornflakes?
@Murray peter:
Really?
You profess to be a Trump supporter (re article on Biden impeachment), I would have thought the National party would better match Trumps political ideology.
@Podge: I don’t work I have minions like you for that :)
“…employment rate of 74.2% among people aged 15-64,”
So, a quarter of them are unemployed? Is that success now?
Economic growth all thanks to the awesome Fine Gael
@Boris Blank: A great little country to do business in.
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