Irish economy grew 5.5% last year, outpacing European peers

Growth in the State's economy outpaced European peers again last year, increasing by 5.5 per cent in value to €347 billion, according to preliminary figures from the Central Statistics Office (CSO).

While data from some European countries has yet to be released, growth in the Republic's economy last year, as measured by gross domestic product (GDP), was faster than the likes of Hungary (4.9 per cent), the Netherlands (1.7 per cent), Austria (1.6 per cent), Germany (0.6 per cent) and Italy (0.3 per cent).

On these figures, which will be updated in June, the State has implied debt to GDP of 61 per cent. When the impact of multinationals operating here is excluded – by using a measure called gross national income* (GNI*) – the Republic has a debt to GNI* ratio of 100 per cent.

But the data shows that growth was broad based, with traditional sectors showing improvements in addition to those sectors in which multinational companies dominate.

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Construction grew by 5.8 per cent, industry (excluding construction) was up by 4 per cent, and the information and communication sector grew by 18.5 per cent.

"Despite significant external headwinds last year, not least slowing global growth and Brexit-related uncertainty, today's figures confirm the resilience and momentum in our economy," said Minister for Finance Paschal Donohoe.

“Of course, we are now heading into a precarious trading environment as a result of the spread of coronavirus. While primarily a public health and well-being issue, the economic impacts have the potential to be significant,” he said, adding that the country enters this period “from a position of strength”.

Intellectual property

On the expenditure side of the economy, imports of intellectual property in advance of the closure of the double Irish tax loophole at the end of this year drove an increase in investment of €69.8 billion to €144.5 billion. Imports of intellectual property products have a neutral impact on GDP, the CSO noted.

Meanwhile, exports of goods and services grew by 11.1 per cent, while imports of goods an services recorded a 35.6 per cent increase, again driven by intellectual property imports.

Personal consumption expenditure rose by 2.8 per cent in the year. This indicator measures spending by individuals on goods and services, and accounted for more than 30 per cent of economic activity last year.

In the fourth quarter GDP increased by 1.8 per cent compared to the third quarter. This was higher than the European Union average of 0.1 per cent. It is also particularly positive given that the Italian economy contracted by 0.3 per cent in the quarter, while the French economy contracted by 0.1 per cent.

However, personal consumption was flat in the fourth quarter.

The balance of payments current account, a measure of transactions with the rest of the world, posted a deficit last year of €32.8 billion compared with a €34.3 billion surplus in 2018. Driving the deficit last year was an additional €70.3 billion in intellectual property imports over the course of the year.