(Bloomberg) -- Irish output grew more than expected last year, probably making it the European Union’s fastest growing economy in 2022.

The Irish economy grew by 12.2% in 2022, aided by particularly strong growth in the manufacturing sector, according to estimates published by the Central Statistics Office. That compares to a forecast of 10.1% in December. The country’s gross domestic product likely grew 3.5% in the final quarter of the year compared to the previous three months, the CSO said Monday.

The forecast reflects the “continued strength of the multinational sector in Ireland,” Finance Minister Michael McGrath said. 

Furthermore, recent international data suggested the broader economic downturn “may not be as severe as previously assumed,” he said, with inflation Ireland appearing to have peaked “sooner than had been expected,” amid easing energy prices.  

Irish GDP figures have long been regarded as painting an overly positive view of the economy’s performance due to the outsized role of the multinational sector. The government uses other metrics metrics such as Modified Gross National Income to measure the size of the Irish economy by excluding globalization effects, and Modified Domestic Demand, a measure of domestic economy activity.

Growth in the fourth quarter was driven primarily by the manufacturing sector, likely due to sectors such as pharmaceuticals and medical devices, Goodbody Stockbrokers Economist Dermot O’Leary said in a note. Even so, domestic demand growth is expected to drop substantially in 2023 due to economic headwinds such as higher living costs and mortgage rates, he added.

A more detailed estimate of Irish GDP growth in 2022 will be published in the next set of Quarterly National Accounts in early March.

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