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Modified domestic demand falls 1.3% quarter-on-quarter
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GDP growth slows down, measure seen as unreliable
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Personal spending grew by 1.1%, driven by services
(Adds details on personal spending data, background)
By Padraic Halpin
DUBLIN, March 3 (Reuters) - Ireland's domestic economy
fell into a technical recession in the final quarter of 2022,
Central Statistics Office data showed on Friday, but still grew
by 8.2% for the year as a whole while the broader but unreliable
measure of GDP powered further ahead.
With Ireland's large multinational sector often distorting
gross domestic product (GDP), officials prefer to use modified
domestic demand to gauge the strength of the economy and it fell
1.3% quarter-on-quarter, following a 1.1% decline in the third
quarter.
Modified domestic demand, which strips out some of the ways
multinational activity can inflate economic activity, was still
much higher in 2022 than in 2021 due to strong investment growth
in the first half linked partly to employees returning to their
offices that fell back very sharply in the second half.
GDP growth slowed to 0.3% quarter-on-quarter from October to
December, following growth of 2.8% in the previous three months,
and stood 12% higher than in 2021 for the year as a whole.
Irish GDP growth was again higher last year than any other
euro zone economy, but so too was modified domestic demand when
compared against GDP growth of other countries.
Friday's data showed personal spending grew by 1.1%
quarter-on-quarter, again driven by services activity with
higher inflation meaning consumers had to spend a lot more in
order to get slightly more goods and services.
Finance Minister Michael McGrath said last week that his
department expected the domestic economy to "effectively move
sideways over the coming months", before returning to growth
from the second quarter of the year.
In its last forecasts in September, the finance ministry saw
modified domestic demand slipping by 0.6% in the first quarter
of 2023 before expanding by 0.8% from April to June and
averaging 1.2% for the year as a whole.
Data so far this year has painted a more encouraging picture
with unemployment down slightly, PMI surveys showing service and
manufacturing sector growth picking up and tax revenues
continuing to climb from record levels.
(Reporting by Padraic Halpin; Editing by Christina Fincher and
Shounak Dasgupta)
