DAVY VIEW

Modified domestic demand provides only a partial view of how the Irish economy is really performing. A decline in non-residential construction so far this year has been a drag on growth, but domestic demand ignores Ireland’s exceptionally large flow of household savings. More reliable signs point to a continued brisk underlying expansion this year. Contrary to popular narratives around concentration risk, we note that growth in wages for domestic-owned firms has exceeded that of foreign-owned firms for the past three years. This suggests that the Irish economy’s success is broader than it is often portrayed.