Irish Economy 2013: The CSO said today that preliminary estimates for
the third quarter of 2013 indicate that GDP (gross domestic product) increased by 1.5% in volume terms on
a seasonally adjusted basis compared with the second quarter of this year while
GNP increased by 1.6% over the same period.
The CSO said that on the output side of the accounts Distribution, transport,
software and communication increased by 2.1% in volume terms between the second
and third quarters of 2013. Industry (including Building and construction)
increased by 2.2% and Other services increased by 1.2% in volume terms on a
seasonally adjusted basis over the same period. On the other hand Public
administration and defence decreased by 1.0% and Agriculture, forestry and
fishing declined by 2.9% between the second and third quarters of 2013.
Personal expenditure and Capital Investment increase: On the expenditure
side of the accounts Personal expenditure increased by 0.9% and Capital
Investment increased by 10.9% between Q2 2013 and Q3 2013. Government
expenditure also increased by 1.1% while Net exports declined by €233m in volume
terms on a seasonally adjusted basis between Q2 2013 and Q3 2013.
Comparisons with Q3 2012: On the output side of the accounts gross
value added in Other services increased by 3.0% while Industry (including
Building and construction) increased by 2.8% in Q3 2013 compared with the same
quarter of 2012. Public administration and defence, on the other hand, decreased
by 3.8% over this period. Agriculture, forestry and fishing contracted by 2.0%
in Q3 2013, compared with Q3 2012 and Distribution, transport, software and
communication declined by 0.4% over the same period.
On the expenditure side Personal expenditure fell by 1.0%. Government
expenditure increased by 0.7% and Capital investment increased by 8.3% compared
with Q3 2012. Net exports were €654m higher in the third quarter of 2013
compared with the corresponding quarter of 2012.
Factor income outflows were €577m lower in Q3 2013 compared with Q3 2012
resulting in the 1.8% increase in GDP becoming a 3.9% increase in GNP over the
The gross national product data in recent years has been impacted by foreign
companies locating their headquarters in Ireland. SEE: Ireland: GDP or GNP? Which is the better measure of economic performance?
Balance of Payments
The Balance of Payments current account surplus in the third quarter of 2013
was €3.42bn an increase of €1.23bn on the third quarter of 2012. A surplus of
€8.95bn on merchandise was offset by a deficit of €5.52bnon invisibles in the
Current account: Compared with the third quarter of 2012, merchandise exports
at €20.60bn decreased by €908m while merchandise imports at €11.66bn fell
Services exports at €23.51bn increased by €908m compared to the third quarter
of 2012, mainly due to higher computer services and tourism and travel exports.
Services imports at €21.40bn were unchanged.
Investment income earned abroad at €13.59bn, dropped by €574m compared with
one year earlier while investment income payable to foreign investors at
€20.72bn declined €1,211m.
Financial account: Direct investment in Ireland increased by €3.55bn in the
third quarter of 2013. An increase of €6,270m in reinvested earnings in Ireland
was offset by a decrease in equity of €118bn and a dip in other capital of
Direct investment abroad increased by €4.26bn in the quarter largely
due to an increase of €3.48bn in reinvested earnings.
Within Portfolio investment, increased investment in Irish equity of €27.27bn
was partly offset by increased investment in overseas equity of €9.39bn in the
Other investment assets decreased by €.7.85bn in the third quarter of 2013
mainly due to a fall of €7.54bn in loans, currency and deposits assets.
Other investment liabilities fell by €10.62bm in the quarter.
Conall Mac Coille, chief economist at
Davy, comments - - "Today's Irish GDP data show the
economy bouncing back sharply in the third quarter. GDP rose 1.5% on the
quarter. The annual growth of GDP is back in positive territory, up 1.7% on the
year. There is now clearly strong momentum heading into 2014, so today's release
is encouraging. The rebound in GDP in H2 2013 that we built into our October
forecasts is now materialising, reinforcing our view that Irish GDP will expand
by 2.5% in 2014.
Revisions mean that the 'double-dip' recession seen through end-2012/early 2013
has been revised away. GDP is now estimated to have fallen by 1.1% in Q1 but
expanded by 1.0% in Q2 2013. The rebound in the economy is more striking in GNP
terms, up 1.6% on the quarter and 3.9% on the year. This reflects the
pharmaceutical patent cliff, squeezing multinational sector profits but with
little impact on employment or GNP. So the GNP data are closer in line with the
favourable developments in the domestic economy, specifically the 3.2% jobs
growth in the year to Q3.
The rebound in Q3 was largely driven by domestic demand, with net trade
detracting from growth. Consumer spending registered a 0.9% rise on the quarter
- - helped by the new seasonal pattern of car sales. There was also a sharp
10.9% rise in investment spending in Q3, up 8.3% on the year. Non-residential
construction is up 21.2% on the year, and capital expenditure on machinery and
equipment (excluding transport equipment) is up by 16.8%. Residential
construction is down 6.1% on the year but, given the positive signals from
housing starts data, should soon start to contribute to the recovery.
Our October forecasts for 2013 were for 1% GDP growth and 2% GNP growth.
Following today's release, our 1% GDP forecast looks a little strong but our 2%
forecast for GNP a little weak. That said, the data may still be revised, and
surveys of economic activity suggest that GDP will expand again at a robust pace
in Q4. Our 2.5% GDP forecast for 2014 is still on track. The big picture from
today’s data is that the economy has bounced back in the second half of the year
as we expected. This will provide strong momentum heading into 2014. Looking
forward, stronger global demand will help Irish export growth and the buoyancy
in the domestic economy looks set to continue."
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