Today’s official growth figures for 2015 from the Central Statistics Office show an extraordinarily strong rate of economic growth - an average of 7.8 per cent for last year. GDP data is heavily influenced by multinational activity – and certainly the breakdown of the figures is affected this time by accounting factors . However with growth across the board in all sectors and the domestic economy showing strong increases there is no doubt that the economy recorded an extraordinary rebound last year.
1. The figures: The national accounts involve a blizzard of often-confusing statistics. The headline figure is the annual Gross Domestic Product (GDP) growth rate in 2015 – the average increase compared to the previous year. This is 7.8 per cent, the highest since 2000. There are a few other figure worth noting. The quarterly rise in GDP- the increase in quarter four of last year compared to quarter three – was a healthy 2.7 per cent.Also, if you look at the fourth quarter on its own and compared it with the same period in 2014, the increase is an extraordinary 9.2 per cent, so the economy had strong momentum late in the year. It is also important to look at Gross National Product (GNP) which nets out the impact of multinational profit repatriation and is often seen as offering a better measure. It rose at 5.7 per cent last year. GNP per capita has now returned to 2007 levels.
2. The spread: Growth was across the board, though some sectors showed much stronger increases than others. Looking at the main areas of the economy, manufacturing recorded 14.2 per cent growth, while building and constructions rose by 8.8 per cent and distribution, software and communications rose by 8.7 per cent.Agriculture (6.4 per cent) and other services (4.3 per cent) also rose, with public administration and defence ( down 2.6 per cent) the only faller.
You can also break down the figures by the type of activity. Consumer spending rose by a healthy 3.5 per cent, though this was much less than the overall GDP rise. The big driver was a 28.2 per cent rise in investment. This appears to have been boosted by a move by multinationals of their intellectual property to Ireland, effectively an accounting transaction driven by tax planning. ( As this is also counted as an import to Ireland it should not have a big impact on the overall GDP figures, just the breakdown)
Imports and exports both grew strongly, though domestic demand is now playing a bigger part in measured economic growth. However the trading sector remains strong and separate figures today show we have a strong surplus on our balance of payments.
3. The outlook: The figures suggest that the economy had strong momentum moving into 2016, a bit more than forecasters had anticipated. As such it shoulder underpin growth for this year. Davy stockbrokers calculate that in terms of national finances, our debt to GDP ratio has now fallen to 95 per cent. Merrion Stockbrokers believe that the economy could grow by another 5 to 6 per cent this year, though they do point to Brexit as a risk to this.
