After several years of rapid growth, culminating in an unprecedented 26 per cent jump in 2015, there is now strong evidence that the Irish economy is cooling.
The latest quarterly national accounts from the Central Statistics Office (CSO) show consumer spending, a key indicator of economic health, rose by just 0.4 per cent in the final quarter of last year, down from 0.9 per cent in the previous quarter and 1.6 per cent in the quarter before that.
Construction-related investment, another important measure of underlying activity, fell by 2.2 per cent in the same period, the first quarterly reversal recorded since 2015.
The numbers tally with separate figures pointing to weaker employment growth in the final quarter and a general slowdown in property prices.
All of which is not to say we’re headed for recession, just that we’re past the peak of the current growth cycle. Unfortunately this loss of momentum appears to be coinciding with Brexit, or worse still, a no-deal, disorderly Brexit.
Though MPs in the House of Commons voted against the prospect of a no-deal scenario this week, there is still no arrangement in place with just two weeks to go.
Normalising growth in terms of consumer spending and construction investment, in other words putting these variables on a sustainable footing, is a good thing.
But trying to gauge what constitutes stable growth in the Irish context is next to impossible because of multinationals, which create a level of volatility in the national accounts not seen in other countries.
Take exports, which rose by 5.3 per cent in the final quarter of 2018, completely at odds with the slowdown internationally, which has prompted the European Central Bank and the Federal Reserve in the US to rethink their interest rate policies.
The inflection is almost certainly related to company-specific activities, perhaps the launch of a new product or the further onshoring of assets.
The size of these companies means that their actions can create mini tidal waves across the Irish economy. Apple holds more than €200 billion in cash outside of its assets.
“It is almost impossible to properly disentangle in these numbers the performance of smaller exporters from the large multinationals whose output is more closely related to firm specific developments than the broader sweep of macro developments,” KBC Bank economist Austin Hughes says.
The headline gross domestic product number suggests the Irish economy is now valued at just over €318 billion, 60 per cent more than at the height of the boom in 2007.
In a pre-globalised world, much of that value jump would have found its way into our pockets, instead most of it relates to the relocation of multinational assets here or contract manufacturing whereby firms outsource manufacturing. This is probably why the Government has taken to keeping silent in the face of such stellar growth numbers.