Ireland’s Economy Contracts Less than Initially Thought

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.

Ireland’s gross domestic product fell by 2% quarter-on-quarter in the first quarter of 2026, following a 3.8% decline in the previous quarter, according to preliminary estimates. This marks the second consecutive quarter of economic contraction, driven largely by a downturn in the multinational-dominated industrial sector. On an annual basis, the economy plunged by 6% in Q1, reaching its lowest level since Q4 2023 and reversing a 2.2% gain in the preceding quarter.