Irish economy returns to growth in first quarter as IT sector expands

The Irish economy returned to growth in the first quarter of 2024 after flatlining for much of last year, but the rate of expansion was more moderate than previously estimated.

Central Statistics Office (CSO) figures indicate the economy in gross domestic product (GDP) terms grew by 0.9 per cent in the first three months of the year as activity in the State’s multinational-dominated tech sector expanded. That compared to a preliminary estimate of 1.1 per cent the CSO published in April.

GDP had contracted for the five previous quarters largely because of a fall-off in multinational exports. This had placed the Irish economy in a technical recession, defined as back-to-back quarters of negative growth.

The latest quarterly national accounts show the domestic economy, as measured by modified domestic demand (MDD), grew by 1.4 per cent as personal spending on goods and services, a key driver of domestic activity, increased by 0.6 per cent.

The latest figures show the globalised industry sector contracted by 6.5 per cent in the first quarter as pharma firms, which dominate the sector, continued to curtail output in response to lower demand globally.

By contrast the information and communication sector posted an increase of 3.4 per cent over the same period as tech firms rebounded from a period of retrenchment in 2022 and 2023. Net exports of goods and services rose by 85.3 per cent in the first quarter or by €19.4 billion, the CSO said.

The industry and the IT sectors collectively accounted for 48.8 per cent of total value added in the Irish economy, compared with a 51.2 per cent share for all other sectors, the agency noted.

There was a mixed picture for sectors focused on the domestic economy.

The professional, administrative and support sector grew by 6.7 per cent, while the arts and entertainment sector expanded by 4.2 per cent. The distribution, transport, hotels and restaurants sector, often viewed as a bellwether, registered modest growth of 0.9 per cent.

However, there were contractions in construction, finance and insurance, and the agriculture, forestry and fishing sectors of 4.9 per cent, 3.7 per cent, and 2.1 per cent respectively.