Press release
Minister McGrath notes the post-pandemic rebound in the domestic economy last year
Published on
Last updated on
Published on
Last updated on
The CSO today (3 March) published the Quarterly National Accounts for the fourth quarter of 2022, and the second estimate of the annual numbers for 2022 as a whole.
Commenting on the figures, Minister for Finance Michael McGrath said:
“GDP grew very strongly last year, up 12 per cent, in line with the 30-day flash estimate from January. However, it is important to remember that GDP is not reflective of the living standards of domestic residents, given the outsized role the multinational sector plays in our economy. That being said, the economic activity that takes place here by the MNC sector is considerable. In the pharma sector alone the value of exports produced and exported from here last year reached €134 billion, while the IDA estimates that around 300,000 people are employed by MNCs in Ireland.
“Our preferred metric is modified domestic demand, data for which show domestic activity fell by -1.3 per cent in the fourth quarter. However, this decline largely reflects an easing in investment in plant and machinery following the very strong increase, to record levels, earlier in the year. The overall level of investment remains very high.
“For the year as a whole, modified domestic demand increased by a very strong 8.2 per cent, slightly ahead of the 7.7 per cent growth my department had projected in the Budget last September.
“I am very encouraged to see that despite inflationary pressures, consumer spending increased by just over 1 per cent in the final quarter, with similar growth recorded in the third quarter. Overall, consumer spending was up 6.6 per cent last year, above previous expectations. This reflects the strength of our labour market, with close to 2.6 million people in employment at the end of last year – a record level – and the targeted supports provided to households by the government throughout last year.
“Since the start of this year, incoming data both domestically and internationally has suggested that the expected slowdown may not be as severe as previously anticipated. While inflation remains elevated, it is expected to ease from the second quarter of 2023. Yesterday's exchequer returns also showed continued strong momentum in tax receipts, with both income tax and VAT receipts remaining robust.
“As evident in today’s release, government supports put in place over the past year have helped to ensure the resilience of the domestic economy in the face of substantial cost of living challenges. These measures have balanced the need to provide timely and targeted fiscal support to the most vulnerable households and businesses whilst avoiding adding to inflationary pressures in the economy.
“My department will be updating its economic and fiscal forecasts in the Stability Programme Update in early April.”
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.
The CSO published initial ‘flash’ GDP estimates on 30 January 2023. These estimates suggested that GDP for 2022 as a whole increased by 12¼ per cent.
The estimated value of exports for the pharmaceutical sector are based on the CSO’s Goods Exports and Imports December 2022 release.