Minister McGrath welcomes strong start to the year for the domestic economy

Modified Domestic Demand – a proxy for the domestic economy – grew by 1.4 per cent relative to the previous quarter
Consumer spending grew by 0.6 per cent in the first quarter, reflecting the continued strength of the labour market
GDP was up 0.9 per cent in the first quarter but fell -6.5 per cent on an annual basis, reflecting the volatility of production in the multinational sectors.

The Central Statistics Office today (6th June) published the Quarterly National Accounts for the first quarter of 2024.

Commenting on the figures, Minister for Finance, Michael McGrath T.D., said:

“While GDP was up in the first quarter, I recognise that GDP continued to fall on an annual basis at the start of this year. 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. The annual decline reflects the volatile nature of multinational production, which can swing significantly from one quarter to another.

“In terms of the domestic economy, I am encouraged to see that Modified Domestic Demand – my preferred metric – grew strongly in the first quarter of this year. Importantly, consumer spending meaningfully contributed to this growth, increasing by 0.6 per cent over the quarter. Clearly this a reflection of the continued strength of the labour market, with almost three quarters of the working age population now in work. Additionally, the significant easing in inflation over recent months has come as welcome relief for households and businesses alike.

The strength of investment by firms over the quarter has also been a positive development. This investment, primarily by the multinational sector, will boost the productive capacity in our economy and will bring with it increased employment and exports in the years ahead. I also expect housing supply to continue to grow solidly in the year ahead, with over 50,000 new units commenced in the twelve months to April 2024.

“Looking ahead, inflationary pressures are now returning to more normal levels and this should bring with it a boost to household real disposable incomes. As the year progresses, the increase in real incomes should further support growth in our domestic economy. That said, we are nevertheless living through a time fraught with uncertainty, geopolitical tensions and a changing economic landscape. Against this backdrop, Government remains committed to careful budgetary management. We will continue to strike the right balance, ensuring that spending is both sufficient and sustainable, meeting the needs of today without compromising the future needs of our people in the years to come.”

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.