Multinationals expected to help Ireland’s economy to bounce back

Irish economic data and surveys released since the second quarter suggest the economy bounced back sharply as activity resumed in many sectors but moderated last month after repeatedly stalled moves to reopen all sectors.

Ireland’s gross domestic product fell by 6.1% quarter-on-quarter from April to June, as the large multinational sector sheltered the national accounts from the worst of the COVID-19 crisis and brought about a shallower recession than most of the euro zone.

The impact of restrictions to slow the spread of COVID-19 varied across the economy, the Central Statistics Office (CSO) said, with the dominant industrial sector up 1.5% but spending on personal consumption down almost 20%.

The quarterly drop was the sharpest on record, surpassing the 4.7% decline in the fourth quarter of 2008 but half the record fall across the euro zone and far lower than the 20.4% collapse in neighbouring Britain.

Finance Minister Paschal Donohoe said the data was broadly as expected and highlighted the dual economic impact of the pandemic on Ireland with pharmaceutical exports growing robustly, while the domestic economy suffered a severe hit.

Ireland exited lockdown at a slower pace than most of Europe and Donohoe noted that the data showed how many of the jobs-rich domestic sectors were hardest hit. The number of people temporarily and permanently unemployed stood at 16.7% at the end of July and the numbers returning to work slowed down last month.

Modified domestic demand, a measure that strips out some of the ways large multinational firms can distort Irish GDP, decreased by 16.4% quarter-on-quarter, the CSO said.

A pausing of the fourth and final stage of Ireland’s reopening plan since July have made it the only member state not to fully reopen its pubs, while severe travel restrictions have halted virtually all inbound tourism.