Ireland's domestic economy grows 1.4% in first quarter

Conor Humphries, Reuters

Ireland's domestic economy expanded by 1.4% in the first three months of the year compared with the previous three months, its strongest quarterly growth in almost two years, official data showed on Thursday.

With Ireland's large multinational sector often distorting gross domestic product (GDP), officials prefer to focus on modified domestic demand (MDD) to gauge the strength of the economy.

On an annual basis domestic demand was up 1.1% in the first quarter of the year, its strongest growth since the same quarter last year, the Central Statistics Office data showed.

The Government has forecast that domestic demand will grow 1.9% for 2024 as a whole and 2.3% in 2025 after growing just 0.5% last year.

"As the year progresses, the increase in real incomes should further support growth in our domestic economy," Minister for Finance Michael McGrath said in a statement welcoming the data.

GDP, which is still the measure used to calculate Ireland's share of activity across the eurozone, expanded by 0.9% in the first quarter compared to the last three months of 2023.

It contracted by 6.5% in the first quarter compared to the same quarter last year, far weaker than a preliminary forecast of a contraction of 1.1%, which McGrath said reflected "the volatility of production in the multinational sectors".

The Government has forecast that GDP would grow 2.6% this year and 3.9% in 2025 after contracting by 3.2% last year. - Reuters