Minister says volatility in multinational sector partly to blame for drop in GDP
Gross Domestic Product (GDP) fell by 1pc in the second quarter, according to figures released by the Central Statistics Office.
A preliminary estimate published at the end of July had suggested an increase of 1.2pc for the quarter.
It means that GDP was down by 4.4pc for the first half of the year compared with the same period last year, with volatility in the multinational sector being blamed.
Personal spending on goods and services, regarded as an important measure of domestic economic activity, grew by 1.1pc in the quarter, with Government spending on goods and services up by 1.5pc.
Modified Domestic Demand (MDD), regarded as a more accurate measure of underlying demand than GDP as it excludes intellectual property products, was also down in the second quarter, by 0.5pc.
Commenting on the figures, Finance Minister Jack Chambers said: “While I recognise the fall in GDP in the second quarter of this year, GDP is not a useful measure in assessing the living standards of domestic residents, given the outsized role the multinational sector plays in our economy. The fall in GDP reflects the volatile nature of activity in the multinational sector.
“In terms of the domestic economy, Modified Domestic Demand declined on a quarterly basis, but recorded positive growth of 1.5pc on an annual basis.”
Mr Chambers said he was pleased to see that consumer spending had contributed positively to economic growth, with consumption increasing by 1.3pc on an annual basis.
The growth in consumer spending, as well as the robust exchequer figures and the strength of the labour market, points to a relatively healthy domestic economy, he said.
“Inflation has now eased back significantly and is expected to remain on a stable trajectory over the short term,” said Mr Chambers. “This will help boost real incomes, which should further support growth in our domestic economy.”
In terms of international accounts, the balance of payments recorded a surplus of €35.5bn, an improvement of €24.1bn compared with the surplus of €11.3bn in the same quarter last year.
The merchandise balance improved by €3.7bn compared with the same quarter last year and the services balance by €17.3bn. The current account balance improved because net outflows of multinational profits, at €22.9bn, were down €3.6bn on the outflows recorded in the second quarter of last year.
The 8.6pc increase in exports in the first half of the year outpaced the growth in imports, which were up 7.8pc.