Ireland's GDP Falls 12.1% in Q1, Driven by Multinational Sector Unwinding
Ireland's GDP dropped 12.1% in Q1, primarily due to a 27.1% contraction in multinational sectors unwinding from last year's tariff-driven export surge. Domestic demand rose 0.6%, with broad-based domestic growth, though wages fell 3% due to reduced hours. This reflects an expected correction in the economy.
Ireland's Gross Domestic Product (GDP) fell by 12.1% in the first quarter of the year, while modified domestic demand, a more accurate measure of the domestic economy, rose by 0.6% from January to March, according to the Central Statistics Office (CSO).
Multinational-dominated sectors contracted by 27.1% in Q1, whereas domestic sectors expanded by 0.4%. Chris Sibley, assistant director general for national accounts, stated this significant GDP fall was expected, largely due to the unwinding of dramatic growth seen in Q1 last year. That growth, a 9.4% surge, was driven by increased tech and pharmaceutical exports to the US ahead of threatened tariffs by then-President Donald Trump.
The decline in GDP was primarily due to the pharma and, to a lesser extent, the tech sectors. When foreign-based companies are excluded, the domestic economy showed positive quarter-on-quarter growth, particularly in distribution, transport, hotels, restaurants, construction, professional services, and the public sector. Domestic consumption also increased this quarter, split evenly between goods (0.5%) and services (0.6%), despite inflation at 3.7%.
However, wages fell by 3% in Q1, mainly due to a reduction in hours worked across several sectors. Gillian Roche, assistant director general, reported Q1 goods exports at €77 billion and imports at €46 billion. Services exports were €127 billion, with imports at €117 billion. Ireland's net international investment position was a €340 billion net liability, and foreign direct investment stock in Ireland stood at €1.1 trillion at the end of March.