Ireland’s Economy Contracts Less than Initially Thought

Ireland’s economy expanded 3.9% quarter-on-quarter in the second quarter of 2026, rebounding from a 7.0% contraction in the previous quarter and ending two consecutive quarters of decline, according to preliminary estimates. This marked the strongest growth since Q1 2025, driven mainly by an increase in the multinational-dominated information and communication sector. On an annual basis, GDP fell 1.6% in Q2, easing from a 13% decline in the previous quarter and marking the third consecutive quarter of contraction after five straight quarters of growth.

Ireland’s economy contracted by 7.0% in the first quarter of 2026, extending a 3.6% decline in the previous quarter, according to revised data. The globalized Industry sector contracted by 12.0% from Q4 2025, while Information & Communication declined by 2.0%. Overall, the multinational-dominated sector fell by 7.5%. Domestic demand, however, showed resilience: Modified Domestic Demand (MDD) rose by 0.3%, driven by a 0.8% increase in personal spending. Domestic-focused sectors expanded by 0.1%, with Professional, Administrative & Support growing by 1.0%. Trade dynamics shifted, with exports falling 8.4% and imports rising 2.4%, leading to a 37.4% drop in net exports. Capital investment surged 27.0%, reflecting higher stock values, while government spending increased by 0.3%. Gross National Product (GNP), excluding multinational profits, rose by 6.8%, supported by a 48.4% decline in factor income outflows.

Ireland’s economy contracted by 12.1% in the first quarter of 2026, extending a revised 4.2% decline in the previous quarter and exceeding preliminary estimates of a 2.0% drop. Modified domestic demand, a broad measure of underlying activity covering personal, government, and investment spending, grew by 0.6%, while Gross National Product (GNP) increased by 1.5%. The multinational enterprise (MNE)-dominated sectors contracted sharply by 27.1%, with industry (excluding construction) down 35.0% and information & communication down 2.0%. In contrast, non-MNE sectors expanded by 0.4%, with the professional, administrative & support sector rising by 1.5% and construction increasing by 1.2%. On the expenditure side, exports decreased by 7.0%, while imports rose by 4.2%, resulting in a 39.8% contraction in net exports. Capital investment surged 13.8%, though machinery and equipment investment declined. Personal consumption and government spending increased by 0.6% and 0.5%, respectively.