- author, John Campbell
- Role, BBC News NI Economics and Business Editor
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The Irish economy is doing better than headline GDP figures suggest, a leading think tank says.
Irish GDP is severely distorted by the activities of large multinational corporations.
This usually leads to an overestimation of the country’s economic growth rate.
However, the Economic and Social Research Institute (ESRI) says the opposite is now happening.
In its quarterly economic commentary, ESRI says that while the local economy has slowed over the course of this year, “there remains a relatively strong degree of growth evident”.
At the same time, the parts of the economy dominated by multinational corporations have slowed, showing in declining exports and investment.
Decline in pharmaceutical exports
The think tank expects GDP to fall by about 3% this year with MDD, a measure of underlying domestic economic growth, of 0.6%.
“The most visible feature of Ireland’s downward growth trajectory this year is the decline in exports,” she said.
The pharmaceutical sector, by far the largest export sector, has seen a 6% decline in exports so far this year.
This is partly due to the return to normal performance of major global pharmaceutical companies, which have seen an increase in sales during the pandemic.
Ireland’s labor market has rebounded strongly since the pandemic and the unemployment rate is now below 5%, which is likely close to technical full employment.
The recent slight rise in the unemployment rate likely only reflects a charge in the statistical rankings of some Ukrainian immigrants, ESRI said.