An “unusual” but not surprising drop in Ireland's GDP was recorded in the first quarter of the year, the Central Statistics Office (CSO) has said.
There was a 12.1 per cent fall in gross domestic product with a 0.6 per cent rise in modified domestic demand – a better measure of the domestic economy – from January to March.
Multinational-dominated sectors contracted by 27.1 per cent in the first three months of the year as domestic sectors expanded by 0.4 per cent.
Chris Sibley, assistant director general with responsibility for national accounts and price statistics, said the “big fall” in GDP was to be expected.
Figures from the CSO indicated that the country's economy grew dramatically this time last year as tech and pharmaceutical exports to the US increased ahead of tariffs threatened by US President Donald Trump.
Ireland’s GDP surged by 9.4 per cent in Q1 last year, according to the CSO, and is now “unwinding” after those increases.
“That big fall in GDP is that unwinding of that activity we saw at the end of 2024 and mostly in 2025,” he said at a briefing on Thursday.
“It’s not as surprising as you might expect, because when we saw a year ago, we were sitting here in the same room, looking at the same increase in the data, and I guess you walked out of the room a year ago thinking it’s probably going to fall again the next quarter, and it’s taken a couple of quarters to unwind.
“So it is an unusual number this quarter, but in the context of the last 12 months, it’s not unexpected.”
The fall in GDP was largely driven by the pharma sector and a more modest drop in the tech sector, he said.
He added that when foreign-based companies are stripped from the figures, there were “small positives” in the domestic economy.
“We can see quarter-on-quarter of positive growth. There’s quite a positive story there, even when we compare the data internationally,” he said.
“The big domestic sector is distribution, transport, hotels, restaurants, watching the recovery in construction and what’s going on there, professional services increasing and the public sector data.”
He said there was “broad-based” domestic growth, with quarter-on-quarter consumption growth indicating “confidence around the economy”.
Compared with other European countries, Ireland’s consumption is “in the middle of the pack”, Sibley said, despite inflation now at 3.7 per cent, according to the latest Consumer Price Index data.
“Despite the large price increases you see in the economy, we’re still seeing large increases in consumption by all of us on goods and services again this quarter. It’s evenly split between goods at 0.5 per cent and services at 0.6 per cent.”
He said another significant change in the data was that people’s wages had also fallen by 3 per cent in Q1 due to a reduction in the number of hours worked.
“We have really good, almost real-time data on this, and this is falling a little – 3 per cent. The main factor driving down the wage bill, which looks different from a lot of the other domestic data, it’s hours worked have fallen.
“We’ll see from our Labour Force Survey publication that hours worked has fallen across a number of sectors, and that’s what’s driving down the what we call the compensation of employees (COE), or wages.
“That’s the only one that’s bucking the trend in the run of domestic indicators.”
He added: “The unusual COE result today is something to watch, but over a longer period of time, that’s a strong positive too.”
Assistant director general Gillian Roche said goods exports in Q1 were worth €77 billion and imported goods worth €46 billion, while exported services were worth €127 billion and imported services €117 billion.
“At the end of March, the net international investment positions – the balance between our financial assets and liabilities with the rest of the world – stood at a net liability position of €340 billion and the stock of foreign direct investment in Ireland stood at €1.1 trillion,” she said.
