Economy grows by over 6% as domestic sector improves

Exports repeat strong growth with 12.3% rise and industrial activity up 9% year-on-year

Construction is included in the industrial activity which has seen a year-on-year rise

Construction is included in the industrial activity which has seen a year-on-year rise

 

Ireland’s economy grew by more than 6 per cent in the first three months of the year compared with the same period in 2014, new figures reveal.

While a large volume of new data reflects the continued strength of the export sector, the figures also point to an increasing level of overall activity in the domestic sector of the economy.

At the same time, upward revisions to gross domestic product data (GDP) serve to bring debt and deficit ratios down.

“Nominal GDP was revised up to €189 billion from €185.4 billion,” said Davy analyst David McNamara.

“The debt/GDP ratio for 2014 is now 107.5 per cent, down from 109.6 per cent, and it should fall to below 103 per cent in 2015 from 105 per cent previously.”

Data from the Central Statistics Office shows that gross domestic product (GDP) in the first quarter of 2015 accelerated by 6.5 per cent year-on-year while gross national product (GNP) advanced by 7.3 per cent.

Industrial activity including construction rose 9 per cent year-on-year, while distribution, transport, software and communications activity rose 6.5 per cent. Capital investment rose 4 per cent for the period.

The GDP figures, which form the basis for key budgetary calculations, show that the pace of quarter-on-quarter economic growth on a GDP basis picked up in the opening months of the year.

On a seasonally adjusted basis, GDP grew 1.4 per cent in the first quarter of 2015 compared with the final quarter of 2014. Comparable figures published previously show that GDP grew 0.2 per cent in the fourth quarter of 2014 compared with the third.

Added value

A 3.2 per cent quarterly increase in building and construction contributed to a net 0.5 per cent increase in industrial activity.

The advance came as exports rose 12.3 per cent in the quarter and personal consumption rose by a net 1.2 per cent, with consumption of goods up 2.7 per cent and consumption of services down 1.7 per cent.

Building and construction investment rose 4.8 per cent in the quarter and research and development rose 1.9 per cent.

However, a drop in aircraft imports led to a 17.3 per cent decline in investment in machinery and equipment investment. This contributed to an overall decline of 3.1 per cent in the level of investment, described as capital formation activity in the CSO figures.

The quarterly figures point to a decline in GNP in the first three months of the year. GNP, which strips out the impact of multinational business activity, eased 0.8 per cent in the period compared with the final three months of 2014. The CSO attributed this to net outflows of €1 billion, due in the main to the multinationals moving profits from the State.

A scheduled review of year-end figures for 2014 led the CSO to revise economic growth data for each of the years back to 2010.

Having said in March that GDP grew by 4.8 per cent, this has now been adjusted upwards to 5.2 per cent. The figure for GDP growth in 2013 was revised upwards to 1.4 per cent from 0.2 per cent.

Similarly, the CSO revised its figure for GNP growth in 2014 to 6.9 per cent from 5.2 per cent.

Revisions

The quarterly national accounts, keenly anticipated by analysts, had been delayed for a month due to the incorporation of 15 years of aircraft leasing data in line with EU guidelines.

Such moves prompted big revisions to balance of payments data and other figures. However, these adjustments did not on their own lead to big changes in the underlying GDP level as the impact of increased imports was quashed by adjustments to international investments.

“The effect in the national accounts on GDP and GNP is relatively minor,” said Jennifer Banim, assistant director general of the CSO.

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