GDP records sharpest contraction in a year in Q4

GDP reading: According to a preliminary estimate, GDP declined 1.3% on a seasonally adjusted quarter-on-quarter basis in the fourth quarter, below the 3.5% expansion seen in the third quarter and marking the worst reading since Q4 2023. On an annual basis, economic activity rose 6.3% in Q4, compared to the previous period's 2.9% growth. Over 2024 as a whole, GDP rose 0.3%, an improvement from the prior year’s 5.5% shrinkage but still the second-worst result since 2012.

Drivers: According to the statistical office, the drop was driven by a fall in the output of the multinational sector, whose output tends to be volatile; their balance-sheet movements of intellectual property crop up in GDP statistics.

GDP outlook: Looking ahead, GDP figures will remain volatile and subject to significant revisions as a result of the heavy presence of multinationals in Ireland.

Panelist insight: EIU analysts commented on risks to the outlook for Ireland’s economy: “From 2025 we expect some abrupt shifts in the US's approach to global trade and tax policies under the presidency of Donald Trump. Ireland’s open economy and extensive trade and investment ties with the US, as well as its low corporation-tax rate and highly favourable business environment for foreign multinational corporations, mean it is one of the most exposed countries in Europe to potentially major economic policy changes in the US.”

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