GDP fell by more than previously estimated in 2023 – CSO

New figures from the Central Statistics Office show that the economy as measured by Gross Domestic Product (GDP) contracted last year by more than previously estimated.

The revised data shows that GDP shrank by 5.5% in 2023, compared to the original estimate of a 3.2% contraction.

The CSO said the fall was driven largely by a 13.8% fall in exports.

The fall followed strong growth of 9.4% in 2022 and 13.6% in 2021.

However, Gross National Product (GNP) which is a measure of economic activity that excludes the profits of multinationals, grew by 5.5% in the year.

While Modified Domestic Demand (MDD), which is considered a better measure of the underlying health of the domestic economy, grew more strongly than previously thought, expanding by 2.6%.

The previous CSO estimate had put the MDD growth at 0.5%.

Minister for Finance Jack Chambers welcomed the figures which he said confirmed strong growth in the domestic economy last year as already reflected in our tax receipts.

“Despite facing significant inflationary pressures, consumer spending nevertheless drove growth in the domestic economy last year,” he said.

“Compared with the previous year, consumer spending increased by nearly 5% last year. This performance reflects the strength of the labour market, which has been at full employment since mid-2022.”

Meanwhile, the economy as measured by GDP grew by less than originally thought during the first three months of the year.

The updated CSO data shows GDP rose by 0.7% between January and the end of March when compared to the previous quarter.

That compares to the original estimate of 0.9% growth, with the downward revision due to a significant contraction in multinational dominated sectors.

However, MDD only grew by 1%, compared to the original estimate earlier this year of 1.4%.

GNP fell by 7%, the CSO said.

The CSO’s Annual National Accounts recorded decreased multinational profit outflows in 2023 compared with 2022, which caused the divergence between GDP and GNP in the year.

Growth in the globalised Industry sector contracted by 21.7% in 2023 compared with 2022 while the Information & Communication sector increased by 7.4% in the year.

It said, overall, the multinational dominated sector contraction was 16.2%, the first contraction since 2013, and in 2023, these sectors accounted for 46.6% of total value added in the economy, compared with a 52.5% share in 2022.

It reported an increase of 6.1% overall for sectors focused on the domestic market in 2023 although the picture was mixed with the Agriculture, Forestry & Fisheries sector growing by 14.8% in the year, the Financial & Insurance sector expanding by 14.1%, and Real Estate Activities increasing by 10.9%.

However, the Construction sector fell by 2.9% in 2023 while the Distribution, Transport, Hotels & Restaurants sector posted a decline of 1.0% in the year.

Looking at expenditure in the economy, personal spending on goods and services increased by 4.8% in 2023.

Government spending on goods and services increased by 4.3% in the year.

It found that personal spending reached €141.3 billion in 2023, exceeding the €123.6 billion pre-pandemic peak level of spending in 2019 by 14.3%.

It accounted for 28.7% of GDP in 2023, a higher percentage compared with years 2020 to 2022 but lower than the 32.1% result posted in 2019.

“Today’s results include estimates for GNI*, the indicator designed to exclude globalisation effects disproportionately impacting Irish economic results,” said Assistant Director General with responsibility for Economic Statistics Christopher Sibley.

“In constant prices, GNI* expanded by 5.0% in 2023. Today’s results show the transition in current prices from a GDP level of €510.0 billion in 2023 to a GNI* level of €290.9 billion.”

“The fall in GDP in 2023 followed strong growth of 9.4% in 2022 and 13.6% in 2021. Ireland’s GDP exceeded €0.5 trillion for the second year in a row in 2023,” he said.