Economic growth in Ireland surged by nearly 10 per cent in the first quarter as multinational firms based in the country benefited from a wave of US imports before President Trump’s April tariffs announcement.
Official figures upgraded Ireland’s initial first-quarter GDP growth estimate from 3.2 per cent to 9.7 per cent, far outstripping any other economy in the eurozone.
The upgrade helped to push up the average growth rate in the 20-country bloc from an estimated 0.3 per cent to 0.6 per cent in the first three months of the year, according to Eurostat.
Ireland’s economic growth figures have long been distorted by the number of large US technology and pharmaceutical companies in the country.
The distortions caused by the huge foreign investment flows have forced the government to create a new, more accurate measure of the state of the economy called “modified gross national income” that strips out hugely volatile capital flows.
Paul Krugman, a Nobel-prize winning economist, has called Ireland’s massive growth figures “leprechaun economics” because they do not reflect real economic activity such as jobs or production.
Ireland’s statistical agency said the first-quarter growth surge was driven almost entirely by “multinational sectors”, which expanded by 12 per cent at the start of the year. Pharmaceutical companies were among those that benefited from a big rise in US imports as companies tried to stockpile and front-run White House tariffs that were announced in April.
Export values from Ireland to the US climbed by 144 per cent on a quarterly measure between January and March. Trump’s tariffs announcement came on April 2 and the president has since threatened to hit the European Union with a blanket 50 per cent tariff on all goods. The first-quarter jump in exports is expected to reverse when figures for the second quarter are published, economists said.
Ireland is one of the EU economies most at risk from an escalating trade war as its economic fortunes are closely tied to US companies such as Apple, which Trump has demanded repatriate jobs to America. Ireland recorded a goods trade surplus with the US worth about €50 billion last year, putting its economic model in the crosshairs of the US administration.
After Ireland, Malta was the second fastest growing economy in the eurozone, with a 2.1 per cent quarterly expansion. Germany, the continent’s largest economy, expanded by 0.4 per cent and France by 0.1 per cent. The UK’s equivalent growth estimate was 0.7 per cent at the start of the year.