Today’s Central Statistics Office figures confirm that the economy is in recession.
The economy, measured by gross domestic product, fell by 1.9% in the three months to the end of September, according to the latest figures from the Central Statistics Office.
Adjusted domestic demand (MDD), which closely tracks the domestic economy, was broadly unchanged over the same period.
When comparing the third quarter to the same period in 2022, GDP fell by 5.8% while MDD fell by 0.4%.
When adjusted for seasonal factors, the economy as measured by GDP has now declined for four straight quarters since the fourth quarter of 2022.
Today’s numbers mean that the economy has met the technical definition of a recession year-to-date.
Multi-denominational sectors of the economy contracted by 3.8% in the third quarter with other sectors of the economy declining by 0.7%.
The statistics office said that exports fell by 2.1% while imports fell by 1.7%.
This reflects a decline in industries dominated by multinational companies, such as pharmaceuticals. However, the information and communications sector, which includes computer services, continued to grow.
Consumer spending also continued to grow during the three-month period.
Domestic economic growth has declined in recent months after a sharp rebound from the COVID-19 pandemic led to MDD growth of 9.5% in 2022, faster than GDP growth in any other eurozone economy.
The unemployment rate rose to 4.8% from a record low of 4.1% in February, with retail sales recording their first annual decline this year last month and surveys showing growth in the services sector slowed for the sixth month in a row.
But a sharp slowdown in inflation to 2.3% last month should provide some relief.
Before today’s numbers, the Ministry of Finance expected MDD to grow by 2.2% this year and again in 2024.
Commenting on today’s CSO figures, Finance Minister Michael McGrath said the decline in GDP reflects the continued decline in demand for Covid-related pharmaceutical products.
“We are also seeing a marked deterioration in global economic conditions, with the OECD this week forecasting weak growth for next year – if achieved, this would be the lowest global growth rate since the global financial crisis bar the first year of 2019.” “The pandemic,” Mr. McGrath said.
But he noted that the news was not all bad on the external front, as services exports recorded strong growth and reached a new record high.
He said adjusted domestic demand — his preferred measure — was unchanged in the third quarter, as consumer spending growth and lower investment spending largely offset each other.
“It is encouraging that personal consumption spending increased by 0.7% in the third quarter, which is broadly in line with pre-pandemic standards and up 2.5% year-on-year,” the minister said.
“Continued growth in consumer spending is supported by strong employment growth – figures published last week showed employment increased by 27,000 in the third quarter – and by falling inflation, which slowed to 2.3% in November, the slowest rate of increase since then.” July 2021.
Michael McGrath said he recognized that many households were still being affected by price pressures, but added that the measures introduced in Budget 2024 would help support households who were still being affected by cost of living pressures.
He also said he expects to see continued momentum in housing supply in the coming months, with just under 31,000 new units coming online in the 12 months to October.