{"id":484820,"date":"2026-06-05T16:50:08","date_gmt":"2026-06-05T16:50:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/484820\/"},"modified":"2026-06-05T16:50:08","modified_gmt":"2026-06-05T16:50:08","slug":"staggering-irish-slump-pushes-euro-zone-economy-into-reverse-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/484820\/","title":{"rendered":"\u2018Staggering\u2019 Irish slump pushes euro zone economy into reverse \u2013 The Irish Times"},"content":{"rendered":"

A \u201cstaggering\u201d 12.1 per cent slump<\/a> in Irish GDP dragged the euro zone economy into an unexpected 0.2 per cent contraction in the first quarter, according to a revised estimate published on Friday.<\/p>\n

The European statistics authority Eurostat had originally estimated first-quarter growth at 0.1 per cent in the 21-country bloc compared with the previous three month-period. The unexpected fall was caused by an unprecedented slump in Ireland, where the latest estimate showed GDP contracted six times faster than the first projection.<\/p>\n

Ireland\u2019s national accounts are notoriously volatile as they are distorted by cross-border financial flows stemming from multinational corporations that have their European headquarters in the country.<\/p>\n

Rory Fennessy, senior economist at consultancy Oxford Economics, called the 12.1 per cent contraction in Ireland\u2019s GDP, compared with the fourth quarter of 2025, \u201cstaggering\u201d. Ireland accounts for around 4 per cent of the euro zone\u2019s GDP.<\/p>\n

Excluding Ireland, \u201ceuro zone growth remains remarkably steady at around 0.2 per cent per quarter\u201d, Fennessy added in a note to clients.<\/p>\n

[\u00a0Don\u2019t worry about a 12% fall in GDP, but watch unemployment closelyOpens in new window<\/a>\u00a0]<\/p>\n

Claus Vistesen, of Pantheon Macroeconomics, said it was \u201cimpossible\u201d to predict Irish GDP \u201cwith any accuracy\u201d. The correction in Irish GDP was \u201cinevitable\u201d after an unexpected surge last year, he added.<\/p>\n

Bank of Ireland, the country\u2019s largest lender, said the numbers \u201conce again\u201d provided no \u201cmeaningful guide\u201d to the real performance of the economy, noting that the 12 per cent GDP plunge reflected just a small number of multinational companies in the pharmaceutical sector.<\/p>\n

Pharmaceutical companies with manufacturing facilities in Ireland had boosted their exports in 2025 ahead of US president Donald Trump\u2019s trade tariff war but that trend is now \u201cunwinding\u201d, the BoI added.<\/p>\n

In the first quarter of this year, multinational-dominated sectors contracted by 27.1 per cent while domestic industries grew by 0.4 per cent, according to Ireland\u2019s Central Statistics Office.<\/p>\n

The Irish government\u2019s preferred metric of modified domestic demand, which covers personal, government and investment spending, grew by 0.6 per cent between January and March.<\/p>\n

Despite Friday\u2019s revision to GDP, the European Central Bank is widely expected to increase interest rates next week for the first time in almost three years in an attempt to fight rising inflation.<\/p>\n

Inflation in the euro zone rose to 3.2 per cent in May, above the ECB\u2019s medium-term inflation target of 2 per cent for the third consecutive month. There is mounting evidence that inflationary pressures are spilling over from energy to other parts of the economy. Core inflation, which excludes energy and food, rose to 2.5 per cent in May.<\/p>\n

\u201cThe ECB sees it [as] necessary to get going with hikes to send a signal, and to not find itself behind the curve later on,\u201d said Spyros Andreopoulos, founder of advisory firm Thin Ice Macroeconomics.<\/p>\n

Rising inflation implied that ECB policymakers were \u201cnearing the \u2018point of no return\u2019 for a second hike\u201d in interest rates after June, he added. \u2013 Copyright The Financial Times Limited 2026<\/p>\n","protected":false},"excerpt":{"rendered":"A \u201cstaggering\u201d 12.1 per cent slump in Irish GDP dragged the euro zone economy into an unexpected 0.2…\n","protected":false},"author":2,"featured_media":484821,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,14787,113,5148,61,60],"class_list":["post-484820","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-central-statistics-office","tag-economy","tag-european-union","tag-ie","tag-ireland"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/484820","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=484820"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/484820\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/484821"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=484820"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=484820"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=484820"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}