The economy, measured using the standard gross domestic product (GDP) tools, fell by 5.5pc in 2023 driven by a contraction in multinational-dominated sectors.
The fall was the biggest anywhere in the European Union last year and compares with a previous estimate that the economy shrank by 3.2pc.
However, using the modified gross national income (GNI*) measurement that strips out the distorting effect of multinationals, the economy grew by 5pc in 2023, the CSO said. GNI* figures are only published once a year, making it too early to compare with last year.
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That’s more consistent with other evidence of a strong domestic economy including record numbers of people at work and a booming tax take.
The Irish economy grew in the first three months of 2024 using the GDP measurements, despite continued contraction in the industrial sector and a decline in investment, but these are both areas that can be significantly affected by internal structuring of assets within multinationals, including for tax reasons.
Goodbody Stockbrokers chief economist Dermot O’Leary said the revisions by the CSO to data on the Irish economy reflect the large and volatile multinational sector.
“Many of the changes are of little consequence for our view on the underlying Irish economy. We focus in on modified domestic demand (MDD) as a clean gauge of activity,” he said.
MDD is estimated to have grown by 2.6pc in 2023, up from a previous estimate of just 0.5pc. In the first three months of 2024 MDD, continued to grow at a steady pace of 2.2pc year-on-year, with consumer spending, government and modified investment all growing at a similar pace, he noted.
“The revisions suggest that the performance of the domestic economy in the period post-Covid was even more impressive than previously thought, with higher consumer spending being a major contributor,” Mr O’Leary said.
“With household balance sheets in good shape, employment and earnings continuing to grow and inflation falling, further growth can be expected in the coming 12 months.”
New Finance Minister Jack Chambers said the GDP figure is not a useful measure in assessing the living standards of domestic residents.
“The annual decline reflects the volatile nature of multinational production. For instance, pharma exports surged during the pandemic, with Ireland a major hub for the production of vaccines and therapeutics, driving export growth and GDP,” he said.
“With the pandemic firmly in the rear-view mirror, these exports eased back, causing a negative drag on exports and GDP.
“With this Covid effect having now washed out of the data, the underlying strength in the sector is clear from very strong growth throughout the early part of this year which, along with computer services, drove export growth of 7pc in the first quarter.”