Irish GDP jumps 9.7% q/q on pharma exports to US
DUBLIN, June 5 (Reuters) - Ireland's gross domestic product grew by a hefty 9.7% quarter-on-quarter in the first three months of the year due to a surge in pharmaceutical exports to the U.S., likely further distorting the average growth rate across the euro zone.
With Ireland's large multinational sector often distorting GDP, officials prefer to use modified domestic demand (MDD) to more accurately gauge the strength of the economy.
MDD has expanded strongly in recent years and grew by 0.8% in the first quarter compared with the previous three months, Central Statistics Office (CSO) data showed on Thursday.
GDP has at times diverged sharply from activity in the wider economy and an initial estimate of a much lower quarterly growth of 3.2% had already inflated the euro zone average, which grew by a faster than expected 0.4% in the first quarter.
Irish GDP was 22.2% higher year-on-year compared to an initial estimate of +13.3%.
"This has come directly out of cross-border pharmaceutical exports in March, particularly," Christopher Sibley, Assistant Director General in the Central Statistics Office, told a news conference.
Separate data last month showed that exports of medical and pharmaceutical products surged by 154% or 34 billion euros in the first quarter, chiefly due to U.S. drugmakers stocking up ahead of potential import tariffs.
More than a dozen of the world's biggest pharma companies have plants in Ireland, where many make medicines or active ingredients for the U.S. market. Exports of pharmaceutical products to the U.S. rose by 243% alone in March.
Thursday's data showing a 14.8% quarter-on-quarter rise in goods exports and a 17.1% expansion in the industrial sector, which Sibley said showed that foreign multinationals were taking large profits from their export sales.
Ireland's finance ministry last month downgraded its growth forecasts slightly for modified domestic demand this year to 2% if a 10% tariff on European Union exports to the U.S. remains in place, or 2.5% if tariffs are removed.
The finance ministry marked up its forecast for GDP - even in the event of the tariffs sticking - to 4.0% from 3.9% before U.S. President Donald Trump's election last November.
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