The impact of inflation dampened the recovery in real consumer spending early in the year even as overall GDP growth continued to soar thanks to the strength of multinational corporations.
Ireland’s economy grew nearly 11% in the first quarter compared to the same period last year on the back of a booming multinational sector and a positive trade outcome, according to national accounts data released on Friday by the Central Statistics Office (CSO).
While modified domestic demand – a more accurate reflection of economic activity – also rose 11%, on a quarterly basis it fell 1% as consumer spending fell along with government spending and investment. .
Nominal consumer spending rose 6% from pre-pandemic levels, but real consumer spending fell 2% when inflation was taken into account, showing that rising prices have a moderating effect on economic activity.
“[The] the data confirms that the Irish economy has rebounded strongly from its slump, but the recovery in real consumer spending has stalled due to record inflation in the first months of the year,” the economist said. Goodbody leader Dermot O’Leary.
“Inflation is already biting and will continue to be a feature over the coming quarters.”
The Ministry of Finance acknowledged that the figures confirmed a weak first quarter for the national economy, which faced challenges such as the Omicron wave, rising inflation and disruption caused by the Russian invasion of the country. ‘Ukraine.
“While GDP growth was exceptionally strong in the first quarter, up 10.8% from the previous quarter, this is undoubtedly a ‘washout’ of some of the one-off factors that led to the unusual negative quarter at the end of last year,” Finance Minister Paschal Donohoe said.
“It’s also important to put these volatile numbers in context.”
KBC chief economist Austin Hughes said the data presented a “muddled picture”.
“This result is quite at odds with evidence of strongly positive economic momentum coming from other recent indicators such as yesterday’s tax receipts.”