Press release
Minister Chambers welcomes confirmation that domestic economy grew strongly last year
Published on
Last updated on
Published on
Last updated on
The Central Statistics Office today (12th July) published the Annual National Accounts for the full year 2023 and revised estimates for the first quarter of 2024.
Commenting on the figures, Minister for Finance, Jack Chambers T.D., said:
“I welcome today’s release which confirms strong growth in the domestic economy last year as already reflected in our tax receipts. Despite facing significant inflationary pressures, consumer spending nevertheless drove growth in the domestic economy last year. Compared with the previous year, consumer spending increased by nearly 5 per cent last year. This performance reflects the strength of the labour market, which has been at full employment since mid-2022.
Investment in the residential sector has also been particularly strong over the last number of years. Reflecting the delivery of nearly 33,000 houses last year, housing investment was up over 6 per cent on an annual basis. I expect this positive momentum to continue into this year with a strong pipeline for housing delivery in the years to come.
More broadly, I am encouraged to see firms continuing to invest in the Irish economy. At the start of this year, machinery and equipment investment increased by nearly 11 per cent year-on-year. This investment will boost the productive capacity of the Irish economy and will bring with it employment and exports in the years ahead.
While I recognise that GDP fell last year, 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. The annual decline reflects the volatile nature of multinational production. For instance, pharma exports surged during the pandemic, with Ireland a major hub for the production of vaccines and therapeutics, driving export growth and GDP. With the pandemic firmly in the rear-view mirror, these exports eased back, causing a negative drag on exports and GDP. With this Covid-effect having now washed-out of the data, the underlying strength in the sector is clear from very strong growth throughout the early part of this year which, along with computer services, drove export growth of 7 per cent in the first quarter.
Looking ahead, inflationary pressures have eased considerably with the headline rate at its lowest level in three years. This should boost household purchasing power and, as the year progresses, support growth in our domestic economy.
We are living through an era of great uncertainty, geopolitical tensions and a changing economic landscape. It is against this uncertain economic backdrop that the Government set out its Budget strategy in the Summer Economic Statement published earlier this week. This strategy will allow us to continue to investment in our public services and infrastructure while preparing us for the challenges that we will face into the future.”
Ends
Note to editors:
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.
Modified Gross National Income (GNI*) is an indicator produced by the CSO that measures the size of the Irish economy excluding globalisation effects.
The value of exports in the pharma sector grew by 11 per cent between January and April year-on-year. For further details on the pharma sector, see Economic Insights (Winter 2023) by the Department of Finance.