Q4 GDP growth significantly revised up

GDP reading: A second reading significantly revised up seasonally adjusted quarter-on-quarter GDP growth for Q4 to 3.6%, up from a 1.3% contraction in the preliminary print. GDP growth was down from 4.1% in the third quarter but remained far higher than that seen in other advanced economies. On an annual basis, economic growth picked up to 9.2% in Q4 from the previous period's 3.2% increase and marked the fastest expansion since Q3 2022. Over 2024 as a whole, the economy grew 1.2% (preliminary reading: +0.3%), up from the prior year’s 5.5% shrinkage but still the second-worst result since 2012 as a result of a weak start to the year.

Drivers: The GDP’s return to growth in sequential terms in Q4 was due to private consumption rebounding: it posted a 1.6% seasonally adjusted quarter-on-quarter increase (Q3: -0.2% s.a. qoq), which marked the best reading in a year. Meanwhile, government spending dropped 0.1% (Q3: +1.3% s.a. qoq). Fixed investment—which tends to be volatile due to the presence of multinational corporations—fell 8.6% in Q4, contrasting the 215.7% expansion recorded in the prior quarter. Turning to the external sector, exports of goods and services rebounded, growing 5.0% in Q4 (Q3: -6.5% s.a. qoq). Moreover, imports of goods and services deteriorated, contracting 1.9% in Q4 (Q3: +2.2% s.a. qoq).

Panelist insight: EIU analysts said: “Ireland will be one of the most affected countries in Europe by the import tariffs pledged by the new US president, Donald Trump. The country has a large trade surplus with the US, which averaged about US$5bn a year in 2021-23. Tariffs would probably dampen growth in Ireland over the forecast period. The chemical and pharmaceutical sectors are likely to be the ones most affected.”

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