Economic growth rises by 9.7%, driven by pharma exports

Economic growth surged by 9.7% in the first three months of this year as tech and pharmaceutical exports to the US increased ahead of tariffs brought in by US President Donald Trump.

The significant growth in Gross Domestic Product (GDP) in the first quarter of this year was driven by increased exports, particularly in the tech and pharmaceutical sectors.

Figures released by the Central Statistics Office (CSO) reveal that the domestic economy has showed steady growth, with public sector expenditure and the wage bill rising.

Chris Sibley, the assistant director-general at the CSO, said the high figures for the GDP were “unusual”.

Many businesses rushed to export goods to the US before Mr Trump’s tariffs sanctions came into effect.

The figures show that the total exports expanded by 9.4% in the first three months of 2025, an increase of 18.2 billion euro, with a growth in goods exports by 14.8%, representing an increase of 13.5 billion euro.

The growth in domestic economy was more moderate.

The modified domestic demand (MDD), which includes personal, government and investment spending, increased by 0.8%.

The current account balance stood at 6.6 billion euro, driven by strong merchandise exports and increased income outflows.

The CSO said the figures highlighted the impact of profit outflows and the need to revisit the valuation of pharmaceutical stocks and exports to ensure accurate GDP measurement.

Personal spending on goods and services, a key measure of domestic economic activity, grew by 0.6% in the first quarter of the year, while wages grew by 0.9% in the same period.

Growth was recorded for every sector except for real estate activities which declined by 1% in the quarter.

Mr Sibley said the data for foreign-owned Multinational Enterprises (MNE) shows that it has been growing throughout 2024 and into 2025, but that the increase of 9.7% is “unusual”.

“That is a big growth rate for GDP, in Q1 2025,” he added.

He said the data in the tech sector shows steady growth, but that there was a surge in pharma exports in the first three months of the year.

“We weigh all the sectors in the economy, look at all the foreign sectors and all the domestic sectors, we see that the growth is all from the foreign sectors,” he added.

He added: “When we see large changes in pharma industry, as we presented here today, generally, you usually see something else with that too, like royalty payments or other costs. They have an increase, like the turnout, through large revenue increases without cost increases.

“The profit that’s generated for that, as the GDP, that’s really what’s given us the large results today.

“They’re always subject to revision, and we’ll be watching again throughout the year. But that’s really what’s given you the GDP results today – the surge in revenue without the kind of associated costs of it.”

The figures also show that the globalised industry sector expanded by 17.1% in the first quarter compared with the last quarter of 2024, while the information and communication sector posted an increase of 3.8% over the same period.

Overall, the multinational-dominated sector rose by 12.4% in the quarter.

Minister for Finance Paschal Donohoe said department officials had assessed the spike in GDP to be “temporary”, and expect exports and GDP to moderate over the year.

“This was driven by a significant increase in the export of goods, and reflects, in large part, the ‘front-loading’ of exports in anticipation of the imposition of tariffs by the US administration,” the minister said.

“This is also a feature in other countries, though the scale is much larger in Ireland.

“Today’s results highlight, once again, that GDP is not an accurate reflection of economic activity happening ‘on the ground’.

“This is why alternative indicators, such as Modified Domestic Demand, are so important in an Irish context.

“On this basis, the domestic economy grew by 0.8% in the first quarter. This is a more accurate reflection of developments in the domestic economy and is consistent with the strength of our labour market – with a record 2.8 million people in employment at the beginning of the year.

“Today’s figures confirm the relatively strong position of the domestic economy at the start of this year.

“Looking ahead, however, the economic outlook has become increasingly challenging. Indeed, the significant increase in uncertainty is likely weighing on growth.

“In this more challenging global environment, we must focus on policy areas where we can exert influence.

“In particular, continuing to boost our competitiveness will be key to ensuring that Ireland remains an attractive place to live, work and invest – not just today, but over the long term.”