Chart of the Week
Although Ireland makes up about 4% of the Eurozone’s total GDP, it accounted for more than half of the region’s growth in the first quarter of 2025. With a striking 9.7% increase GDP, Ireland alone contributed over 0.3 percentage points to the Eurozone’s total growth of 0.6%.
OUR ANALYSIS
The Celtic economy is undeniably dynamic, with growth averaging higher than that of the broader Eurozone. However, this impressive performance can largely be attributed to a specific peculiarity.
Ireland’s GDP has become significantly more volatile than that of the Eurozone as a whole, primarily due to the outsized impact of intellectual property (IP) transfers on its national accounts. For tax-related reasons, Ireland has become a favored location for multinational companies to house their IP. These transactions are counted as investments in GDP calculations, which inflates growth figures-often without reflecting genuine improvements in the underlying economy, either in Ireland or across the Eurozone.
Official Irish data does not allow for a direct breakdown of the impact of IP transfers on quarterly GDP growth. However, when analyzing Eurozone-wide growth figures, it’s important to account for the potential distortions introduced by Ireland’s unique national accounting dynamics.
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Written on 13 june 2025. Opinions subject to change.
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