Economy grew 1.7% in third quarter as deficit with UK widens

Strong growth in financial services but agriculture, hauliers and tourism are weaker

The State’s economy grew 1.7 per cent in the third quarter of this year, helped by activity in the financial and insurance sectors. Photograph: iStock

The State’s economy grew 1.7 per cent in the third quarter of this year, helped by activity in the financial and insurance sectors. Photograph: iStock

 

The State’s economy grew 1.7 per cent in the third quarter of this year, helped by activity in the financial and insurance sectors, figures released by the Central Statistics Office (CSO) show.

According to the quarterly national accounts, real GDP rose 1.7 per cent compared to the second quarter and 5 per cent on the same period last year. That compares to growth of 0.7 per cent seen in the second quarter.

The most positive contribution was made by the financial and insurance activities sector, which rose 5.7 per cent in the quarter, while the professional, administrative and support services sector increased by 5.1 per cent.

At the other end of the spectrum, there was a 3.2 per cent fall in agriculture, forestry and fishing in the quarter, while the distribution, transport, hotels and restaurant sector contracted by 1 per cent fall.

Spending on goods and services by individuals accounted for just under half of GDP in the quarter, with personal consumption expenditure rising 0.9 per cent.

“Despite significant external headwinds, not least slowing global growth and Brexit related uncertainty, today’s figures confirm the momentum in the Irish economy that we have seen in other recent data releases,” said Minister for Finance Paschal Donohoe.

Exports of goods and services rose by 2.4 per cent. CSO assistant director general Jennifer Banim noted that the figures show a current account deficit of €1.7 billion with the UK in the three-month period. That compares with a deficit of around €700 million this time last year. In the second quarter the deficit was €2.35 billion.

Income flows

While there was a €2.3 billion surplus for trade in goods and services, that was offset by a €4.1 billion deficit in income flows, she said.

Imports fell by 22.5 per cent in the period which was attributed to a reduction in the import of intellectual property. This doesn’t have a significant effect on GDP growth because lower imports of intellectual property are offset by declines in intellectual property investment.

The balance of payments current account, a measure of transactions with the rest of the world, returned to a surplus of €11.2 billion in the quarter, compared to a €26.5 billion deficit the previous quarter. That was due to a surge in intellectual property transfers prompted by closure of the controversial double Irish tax loophole.

Looking forward, Mr Donohoe said “early indications suggest solid growth in the fourth quarter as well”.