The CSO reported today that preliminary estimates indicate that GDP (gross domestic product) in volume terms increased by 4.8% for the year 2014. For the third successive year, GNP (gross national product) showed an increase over the previous year, at a rate of 5.2% in 2014 over 2013. However both GDP and GNP data has been distorted by tax avoidance and the booking of overseas manufacturing as exports caused the value to jump by 23% (20% due to tax) in the year while imports rose by 22% (14% due to tax) resulting in a net goods exports rise of almost €10bn — Dell for example books the output of its Polish plant in Ireland.
However, services exports reflecting "Double Irish" bookings by the likes of Google, were more than offset by royalties paid and total net exports amounted to €4bn.
GNP which generally excludes the profits of the significant foreign-owned sector is also exaggerated by mainly US companies becoming Irish for tax purposes — the CSO does not give an estimate of the impact.
On a seasonally adjusted basis, constant price GDP for the fourth quarter of 2014 increased by 0.2% compared with the previous quarter of 2014 while GNP increased by 2.3% over the same period.
Domestic demand grew by 2.9% in the full-year, the first year of growth since 2007.
Value added for all principal economic sectors increased in 2014
The CSO reported that the value added of agriculture rose by 10.0% in volume terms in 2014 compared to 2013. The distribution, transport, software and communications sector increased by 8.0%, and other services by 3.4%. There was an overall increase of 1.5% in industry, (within which building and construction recorded a 6.9% increase in real terms). Public administration and defence recorded an annual increase of 1.1%.
Capital Investment and Net Exports increase
On the expenditure side of the accounts capital formation rose strongly by 11.3% during 2014. Personal consumption, which accounts for approximately 60% of domestic demand, rose by 1.1%, while government expenditure was little changed over the same period (0.1%).
Import growth during the year of 13.2% outpaced that of exports at 12.6%. Overall net exports for the year increased by €3,785 m, which coupled with the 3.6% increase in total domestic demand resulted in an overall increase in real GDP in 2014 of 4.8%.
Increase of 2.3% in GNP (seasonally adjusted) in Quarter 4
The CSO says initial estimates for the fourth quarter of 2014 indicate that there was an increase of 0.2% in GDP in real terms in Q4 2014 compared to the previous quarter. Agriculture made the most positive contribution to the Q4 result, rising by 4.8%. Increases were also recorded in other services (1.0%) and industry (0.5%). Distribution, transport, software and communication declined by 1.4% over the period compared with Q3 2014, while public administration and defence decreased by 1.1%.
On the expenditure side there was a decline in net exports of -€1,667m (-15.7%) during the quarter, largely driven by higher imports (5.4%). Personal consumption expenditure exhibited an increase (1.3%) while capital investment increased by 0.7% in Q4 compared to Q3.
Factor income outflows were 16.6% lower than in the previous quarter leading to an overall increase in GNP of 2.3% for the fourth quarter compared with the previous quarter.
Balance of Payments
The Balance of Payments current account surplus in the fourth quarter of 2014 was €3,718m. The current account surplus for 2014 was €11,467m, an increase of €3,834m on 2013. The annual services surplus decreased by €6,364m while the merchandise surplus increased €9,714m and income outflows were €485m lower than 2013.
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