Irish economy defies worsening outlook to record strong growth in June – The Irish Times

Stronger-than-expected retail sales continue to drive growth in the Irish economy, according to the Economic and Social Research Institute (ESRI).

The think tank’s latest „nowcast” — which uses real-time data — showed modified domestic demand (MDD) rose 3.5 percent year-on-year in June. „This is slightly higher than our May 2023 estimate of 3.1 percent,” ESRI said.

MDD is considered the most reliable measure of domestic economic conditions, including household spending, firms’ investment, and government net spending.

Although financial conditions and negative business sentiment indicators were seen in June from 12 months ago, there were strong improvements in retail sales and an increase in industrial production from 12 months ago,” ESRI said.

Based on data from April, May and June, the agency estimated that MDD grew at a stronger than earlier estimate of 3.4 percent in the second quarter of 2023.

The Central Statistics Office’s (CSO) provisional estimates released last month showed a regular measure of GDP growth rose 3.3 percent in the second quarter.

The Irish economy shrank by 2.8 percent of GDP in the first quarter as activity in the multinational sector slowed.

This follows a 0.1 percent contraction in the final quarter of last year, where the economy entered a technical recession — defined as two consecutive quarters of negative growth.

Strong growth here in the second quarter appears to be boosting growth across the euro area, which saw GDP rise 0.3 percent in the second quarter.

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Higher interest rates designed to fight inflation have clouded the outlook, making it more expensive for households and businesses to borrow, invest and spend.

On an annual basis, the euro zone grew just 0.6 percent, its worst performance since the 2020-21 recession.