Press release
Minister McGrath notes publication of third quarter National Accounts data
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Published on
Last updated on
The Central Statistics Office today (1 December) published the Quarterly National Accounts for the third quarter of 2023. Commenting on the figures, Minister for Finance Michael McGrath said:
“GDP fell by -1.9 per cent in the third quarter compared to the previous quarter, continuing a trend we have seen in recent quarters. As is widely acknowledged, GDP is not a useful measure in assessing the living standards of domestic residents, given the outsized role the multinational sector plays in our economy.
“That said, the decline reflects, in no small part, the ongoing fall-off in demand for COVID-related pharmaceutical products. We are also seeing a marked softening in global economic conditions, with the OECD this week projecting weak growth for next year – if realised, this would be the lowest rate of global growth since the Global Financial Crisis with the exception of the first year of the pandemic.
“However, it’s not all bad news on the external front, with services exports recording solid growth and reaching a new record level.
“In terms of the domestic economy, Modified Domestic Demand – my preferred metric – was unchanged in the third quarter, with growth in consumer spending and a fall in investment spending largely off-setting each other.
“Encouragingly, personal consumer spending increased by 0.7 per cent in the third quarter, broadly in line with pre-pandemic norms and up 2½ per cent on an annual basis. Continued growth in consumer spending is supported by strong employment growth – figures published last week showed that employment increased by 27,000 in the third quarter – and by the easing of inflation, which has slowed to 2.3 per cent in November, its slowest rate of increase since July 2021.
“I am cognisant that many households continue to be impacted by price pressures and Government continues to play a key role in protecting those most acutely impacted. Measures introduced in Budget 2024 will help to support households that continue to be impacted by cost-of-living pressures, with many of these measures hitting people’s pockets earlier this week.
“Importantly, investment in new residential dwellings grew strongly, up 14 per cent in the third quarter year-on-year. I expect continued momentum in housing supply in the months ahead, with just under 31,000 new units commenced in the twelve months to October. We should see these units come on-stream throughout the next year.”
Modified (final) domestic demand, a proxy for the domestic economy, 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.
Quarterly consumer spending growth averaged 0.75 per cent in the 5 years prior to the pandemic.
For more on recent developments in the pharma sector and patterns in household consumption, read: Economic Insights – Winter 2023, Department of Finance.