In the year to the end of September, the economy grew by 14.5% compared to the same period last year.

The months from July to September saw the hospitality sector get a welcome break from Covid restrictions.

This boosted the domestic economy with Modified Domestic Demand growing by 1.4%.

In the year to the end of September, this measure of activity in the domestic economy was 4.9% ahead of last year but still 1.2% behind the same period in 2019.

Spending by consumers is also up 4.3% in the first nine months of the year compared to 2020 but it still lags the same period in 2019 by 7.1%.

The multinational sector continues to do well, with exports of computer services particularly strong. The value of these exports was offset, however, by a corresponding increase in imports of royalties.

The outsize impact of multinationals can still be seen in the fact that GDP growth for the first nine months of this year is 14.5% compared to 2020, a level of increase that probably doesn’t match with most people’s experience in the economy.

MDD – ‘preferred measure’

Modified Domestic Demand, a broad measure of underlying domestic activity that covers personal, government and investment spending, increased by 1.4%.

Personal spending on goods and services increased by 0.5% in the three month period under examination, while government spending on goods and services increased by 0.8%.

In year-to-date results for 2021, GDP increased by 14.5% compared with the first three quarters of 2020 and by 21.7% compared with the corresponding quarters of 2019.

At a briefing today, the CSO described the quarterly figures for the economy as ‘muted’ and suggested that some of the figures from industrial sectors may have been affected by ‘timing issues.’

“Final Domestic Demand, a measure of investment, personal and Government spending, decreased by 0.9% in the third quarter of 2021,” Jennifer Banim, Assistant Director General with responsibility for Economic Statistics at the CSO said.

“The Modified Domestic Demand indicator – an important measure of underlying domestic demand that excludes the effects of intellectual property products (IPP) and leased aircraft – increased by 1.4% in the quarter. For the year to date, MDD increased by 4.9% compared to the equivalent period in 2020 but is 1.2% lower than the corresponding nine-month period of 2019,” she explained.

Commenting on the figures, Minister for Finance Paschal Donohoe said the outcome, while confirming the continued growth in the domestic economy, was slightly below expectations, particularly on the consumer spending side.

“Modified domestic demand, my preferred quarterly measure of economic activity, increased by 1.5% per cent quarter-on-quarter. It now stands at more than 3% above the pre-pandemic level in the fourth quarter of 2019,” the Minister noted.

“Consumer spending grew by a modest 0.5%, a figure that was somewhat behind what had been expected, given the ongoing strength of VAT numbers and the recovery in employment and wages,” he added.

The ‘exceptionally strong’ GDP figures were broadly in line with expectations, the Minister noted, pointing to the ‘significant disconnect’ between this indicator – which is distorted by globalised activities in the multinational sector – and underlying developments in the domestic economy.

Minister Donohoe said there were indications that domestic growth rates in the domestic economy would ease in the final quarter of the year.

“Part of this is the continued adjustment in growth towards pre-pandemic trends with re-opening effects and pent-up demand tapering off, with an element of household caution also a factor in light of epidemiological developments,” he said.