Record exports help economy to grow in third quarter
THE ECONOMY grew in the third quarter of 2010, according to the Central Statistics Office. The two main measures of economic growth – gross domestic product (GDP) and gross national product (GNP) – both expanded. This is the first time since 2007 that both measures increased simultaneously.
The growth was accounted for by further record levels of exports. The domestic economy, which includes spending by households and Government, continued to contract.
The GNP measure, which excludes repatriated multinational profits and the servicing of foreign debt, grew by 1.1 per cent quarter on quarter. This was the biggest rise since early 2007.
GDP rose by a more modest 0.5 per cent compared to the previous quarter. This rate of GDP growth was ahead of the average for the euro zone, which stood at 0.4 per cent in the same period.
Although the rate of GDP growth was above the consensus expectation of forecasters, it raises questions about the Government’s full-year growth target. Owing to weaknesses earlier in the year, a sharp acceleration in growth would be needed in the final quarter of 2010 if the Government target of 0.3 per cent GDP growth is to be achieved.
Household consumer spending, which accounts for slightly more than half of total GDP, was down by 0.5 per cent quarter on quarter. This reflects a fall in the numbers at work as well as shrinking earnings.
The volume of goods and services exports reached an all-time high in the third quarter, growing by 3.6 per cent on the previous quarter. This was the second consecutive record-breaking quarter.
When considered by economic sector, industry (excluding construction) was the main driver of growth, expanding by 2.8 per cent on three months earlier.
All other sectors bar agriculture continued to shrink, with the largest decline – of 8.2 per cent – registered in building and construction.
A separate set of statistics, also published yesterday by the CSO, suggest that competitiveness is being restored and that imbalances in the Irish economy are unwinding.
The first significant payments surplus since 2003 between Ireland and the rest of the world was recorded in the third quarter of 2010, according to the Balance of International Payments publication.
This was accounted for by stronger services exports and higher returns on foreign investments of Irish residents. A fall in imports of goods and services also contributed.