Ireland’s turbocharged multinational sector keeps producing the goods – literally speaking. According to the Central Statistics Office (CSO), the economy here grew by a whopping 12.2 per cent in gross domestic product (GDP) terms last year on the back of multinational exports, primarily from the pharma and medtech sectors.
The flash estimate of GDP for 2022 comes ahead of the official figure in March, but barring a major revision it will place Ireland among the global economic elite, in growth terms at least.
The headline figure was twice that of the next best country, Portugal (6.5 per cent), and nearly four times the EU or euro area average.
It came courtesy of an expansion in manufacturing, which is dominated by big US multinationals in the life sciences sector, which have continued to trade strongly despite a slowing global economy.
Minister for Finance Michael McGrath said the figures reflected the continued strength of the multinational sector in Ireland while noting the figures mirrored robust export and corporation tax numbers last year. However, he cautioned that headline GDP did not “reflect events on the ground in the domestic economy as it is greatly influenced by the outsized role that the multinational sector plays in our economy.”.
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Ministers have been schooled to play down the headline growth numbers here because they are so divorced from the real world economy faced by citizens here and because GDP has become something of an abstraction.
The Irish economy is at the vanguard of a new globalised world order, which has given birth to behemoth companies that are as big and as wealthy as whole countries and whose results ripple through the national accounts of small economies like mini tidal waves.
[ Irish economy grew by 12.2% last year despite price squeeze and slowdown internationally ]
As the pharma and medtech multinationals motor on, households here are facing the triple negative of higher energy bills, costlier groceries and more expensive mortgage repayments. Taken together, the squeeze on real income will feel recessionary despite what the headline numbers tell us.
Because the growth numbers here and elsewhere are better than expected, the European Central Bank will likely feel less worried about the growth impact of higher interest rates and will therefore press on with monetary tightening. Frankfurt is expected to hike up interest rates by another 0.5 per cent this month, heaping further financial pain on mortgage holders here.