However, when the impact of foreign owned multinationals is excluded, the domestic economy shrank by 2.9%; largely due to Covid restrictions.

The growth in the economy in the first three months of this year is once again due to the continued exporting success of the pharmaceutical industry and computer services.

Both sectors are largely foreign owned.

The output of industry rose by 12.8% while information and computer services rose by 19%.

Meanwhile, construction fell by 23.4% due to the Covid restrictions in place in the early part of the year.

Transport, hotels and restaurants were also down by 10%.

This contributed to Modified Domestic Demand, which strips out the impact of foreign multinationals, shrinking by 2.9% and gives a closer picture of what’s really going on in the economy.

Another interesting snippet from today’s accounts – a massive €24 billion fall in our imports of services, mainly intellectual property and largely explained by the expiry of the fabled double-Irish tax structure at the end of last year.

Minister for Finance, Paschal Donohoe

Minister for Finance, Paschal Donohoe said the strong GDP growth in the first quarter of the year was driven by a relatively small number of sectors, with in some cases, the increased activity generating limited domestic employment.

“It is for this reason that I have often said that GDP is not an accurate measure of what’s going on in the Irish economy,” he said.

“I place a much greater emphasis on measures such as Modified Domestic Demand and GNI in assessing the underlying economy in Ireland.

“Modified Domestic Demand fell by 5% year-on-year in the first quarter, a figure that is in-line with expectations and reflects the impact of Level 5 restrictions in the first quarter,” he added.

Minister Donohoe said while the level of restrictions was comparable with that of the first lockdown in the spring last year, the fall in domestic economic activity was much less severe on this occasion.

“This points to a weakening in the relationship between restrictions and economic activity, a phenomenon observed in many countries and one with reflects adaptation and innovation by firms and consumers,” he said.

Ibec, the group that represents Irish business welcomed the figures published today, which it said showed remarkable growth on the back of continuing export momentum.

Ibec Chief Economist Gerard Brady said today’s figures are a welcome confirmation that Ireland’s robust export performance is continuing to deliver strong growth despite the impact of the pandemic on our domestic sectors.

“Despite the comparatively poor performance of domestic sectors in the first quarter of the year, there are signs of light on the horizon, with strong VAT returns for March and April indicating the potential for a rapid recovery in consumption,” he said.

Mr Brady said this, in conjunction with positive improvements in employment as sectors reopen, shows an economy well placed to recover post-vaccine rollout.

“However, this rapid growth is not without its own challenges, with data released earlier in the week showing rising earnings and labour costs for those in their jobs since Covid hit.

“Combined with a take-off in demand amid the economic reopening, the impact on costs and margin compression will need to be monitored closely, as supply struggles to keep up,” he said.