Thanks to my colleagues at the Department of Finance, here’s a quick health check of the Irish economy and our public finances.
Growth is expected to exceed 6% in 2015 –the highest in the OECD. Breaking this down shows nominal GDP at 6.9%, real GDP at 4% and real GNP at 3.9%. This puts Ireland at the top of the EU league in growth terms. While estimates are slightly lower for subsequent years – real GNP at 3.5% in 2016 for example – this testifies to a resilient growth glide through to 2020.
Our export growth has been strong this year with second quarter growth of 13.6% in year-on-year terms. Our trade surplus is at near historic highs. While emerging markets are weakening, our traditional partners in the UK, US and EU are performing well, helping to sustain our exports. The lower Euro is also a boost in non-EU markets.
Consumer sentiment in Ireland is at a nine year high, personal consumption is rising, and retail sales are very strong this year, up 9% to end-August year on year. We remain competitive with unit labour costs growth at 2%, well below euro-area average.
Looking at our national finances, it is fair to say that we are back on track after some very tough years. This has come at a price and is thanks to fiscal discipline and public fortitude; namely budget consolidation of €30bn or 17% of GDP over the seven years since 2008. Current figures back up the turnaround in the national accounts, a very significant achievement by any standard and an enhancement of our financial/investment reputation that will stand us in good stead. Ireland is a consistent over-achiever on the excessive deficits targets. An underlying general government deficit of 4.0% of GDP for 2014 was below the target ceiling of 5.1%. The Stability Programme Update forecasts a deficit for 2015 of 2.3% of GDP. Our debt-GDP ratio, which peaked in 2012 at 120%, should hit 100% this year and is on target to achieve 60% over the coming years.
Employment is growing steadily, hitting 3% is the second quarter this year, with unemployment dropping from 12.2% at the start of 2014 to 9.4%.
In short, Ireland continues to progress across four key areas –strong economic growth, increased domestic activity, stable bond yields and improving employment statistics.
There is no room for complacency though. The fair winds of our competitiveness and international exchange rates can change. China and emerging markets are weakening (average growth has declined for the past five years) and the IMF predicts that global growth this year will be the slowest since the crash at 3.1%. Yet the recovery in Ireland is increasingly broad-based, with growth in 12 of 14 sectors. Sustaining this and our robust investment and export performance will define not just our prosperity but our resilience. That topic was a central one in yesterday’s meeting of the Export Trade Council of which more anon.
Eamonn McKee
DG Trade Division
Department of Foreign Affairs and Trade
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