There’s been plenty of Irish economic data released over the past number of weeks, but many could be forgiven for engaging in some head scratching around the economy’s direction given last week’s news from Ireland’s Central Statistics Office (CSO) that Ireland moved into recession in Q3.
Let’s dig into some of the more important recent releases and what they mean for Ireland’s near-term economic outlook.
Q3 GDP – confirms recession with exports weighing on activity through 2023
Last week the CSO released the national accounts for the third quarter of the year. The key headline was that GDP had contracted through the first three quarters of the year, thereby confirming what economists call a ‘technical’ recession i.e. consecutive quarters where the economy shrinks (see Q3 performances below across the various expenditure categories).
But the overall GDP recession ‘pattern’ masks a big difference between what is happening on the ground in the domestic economy and what is happening in the export sector which is more exposed to a slowing global economy in recent months.
In the traded sector of the economy exports have fallen through the course of 2023 from the high levels achieved in 2021 and 2022. This also appears to have been skewed somewhat by lower exports from sizeable sectors such as the pharmaceutical sector and this weakness in exports has largely been the driving factor behind Irish GDP growth forecasts being trimmed over the past number of months.
In contrast consumer spending in the domestic economy grew again by 0.7% in Q3 and has grown throughout 2023 according to the CSO.
This is one of the main snags in trying to analyse the performance of the Irish economy currently. In short, domestically the economy is still performing solidly but the more international facing parts of the economy are finding the going tougher.