There are now two distinct economies in Ireland. One is uber-rich and plugged into the global economy; the other is congested, potentially scarred from repeated Covid lockdowns and needs massive infrastructural investment to grow.
The latest growth numbers from the Central Statistics Office (CSO) highlight the growing divergence between the multinational sector here and its domestic counterpart.
The former, led by the world’s leading pharma and tech giants, is seemingly Covid-19-resistant and drove a 7.8 per cent jump in gross domestic product (GDP) in the first quarter of 2021, according to the CSO.
While most of Irish society laboured under lockdown, activity in the State’s IT sector rose by 19 per cent in the first three months of the year while industrial output, which incorporates the pharma sector, rose by 12.8 per cent. These output jumps combined to drive exports forward by nearly 6 per cent.
In contrast, activity in the construction sector fell by close to a quarter while output in the distribution, transport, hotels and restaurants sector contracted by nearly 10 per cent.
GDP numbers
The real feel in the Irish economy has never quite matched the headline GDP numbers. And so 7.8 per cent expansion dissolves into a 2.9 per cent contraction when viewed through the prism of modified domestic demand, the CSO’s preferred indicator for the domestic economy.
This is not to paint the domestic economy as backward. Just that it expands and contracts on the basis of prevailing economic conditions and is undermined by the sorts of problems you typically see in other economies – lack of investment in certain areas, housing shortages, congested transport.
Most multinational investment tends to be centred in and around Dublin and the east coast, which has accelerated an existing east-west, urban-rural divide. Globalisation has polarised economies and polarised workers. Ireland is just a microcosm of this. Differentials in wages, housing, and health are accelerating and this is fuelling an increasingly fraught political discourse.
