Economy enters technical recession according to CSO

The Central Statistics Office has confirmed that Ireland has entered into a period of technical recession.

A technical recession, defined as two-quarters of negative growth, has been declared despite bullish Government claims of record corporate tax expenditures, a surplus, and low unemployment rates.

The CSO said that Irish gross domestic product – the total value of all goods and services within the economy – grew by 9.4% in 2022 compared to previous estimates of 12% as the economy rebounded from the effects of the Covid-19 pandemic.

A somewhat sluggish start to 2023 has caused a technical recession to be declared following a rougher-than-expected end to 2022 for the Irish economy.

Commenting on the figures, Minister for Finance Michael McGrath said that some of the “headwinds” that existed at the start of the year “remain ever-present” in the second half of 2023.

“Our economy is still facing significant capacity constraints, particularly in our housing and labour markets, which are keeping non-energy inflation much higher than expected,” he said.

“Rising interest rates, have also placed a greater financial burden on businesses and households. Growth has also slowed in many of our key export markets, weighing on demand for Irish exports as a result.”

Early 2023 saw the failure of Silicon Valley Bank in the United States and Credit Suisse in Switzerland, which led to fears of a global contagion and uncertainty within the global financial markets.

A technical recession was declared in the Eurozone earlier this year, while Germany, the largest economy in the Eurozone, also declared a technical recession in May of this year.

“The industry sector recorded a significant decrease over the same period compared with the previous quarter, falling by 13.2%, more than offsetting the growth in the information and communication sector of 4.9% in the quarter,” said national accounts statistician Gordon Cavanagh.

Some sectors performed better overall however and saw growth, with industries such as construction, agriculture, forestry, fishing, hotels, and restaurants all seeing growth in the first half of 2023.