Domestic economy returns to growth in first quarter

The State's domestic economy returned to growth in the first three months of 2o23 with a strong expansion in the construction and agriculture sectors puling the country out of a shallow recession.

With the large multinational sector often distorting gross domestic product (GDP), officials prefer to use modified domestic demand to gauge the strength of the economy, which grew 2.7 per cent in the first three months compared to the previous quarter after two quarters of contraction.

The construction sector grew 12 per cent in the quarter while agriculture, forestry and fishing expanded by 15.9 per cent, data from the Central Statistics Office (CSO) showed. Personal spending on goods and services posted quarterly growth of 1.7 per cent in the period.

In a sign of the strength of the economy, the unemployment rate hit an all-time low of 3.8 per cent in May, dipping below the previous low of 2001 in the early days of the Celtic Tiger.

Modified domestic demand, which strips out some of the ways multinational activity can inflate economic activity, grew 8.2 per cent in 2022 as a whole, faster than GDP growth in any euro zone economy.

In its last forecasts in April, the Department of Finance said annual modified domestic demand growth was set to slow to 2.1 per cent in 2023.

GDP shrank 4.6 per cent in the first three months of the year, compared to a decline of 0.1 per cnet in the last quarter of 2022 as the CSO's measures of Globalised Industry contracted 18.2 per cent. GDP was 5.5 per cent higher than in the first quarter of 2022.

The Government has forecast GDP growth is likely to slow to 5.6 per cent in 2023 from 12 per cent in 2022. -Reuters