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Irish GDP/GNP Q3 2016 – Exceptionally strong performance, but largely due to ‘once offs’

This morning the Central Statistics Office (CSO) published the national accounts for Ireland for the third quarter of 2016. Overall they showed that real GDP and GNP grew by 4% and 3.2% respectively in the quarter meaning over the past twelve months they grew by 6.9% and 10.2% respectively (see table 1). 

Table 1: Irish National Accounts, Q3 2016

 

Personal Consumption (€Bn)

Government Expenditure (€Bn)

Capital Formation (€Bn)

GDP (€Bn)

GNP (€Bn)

Q3 2016

23.5

7.1

13.1

64.8

53.5

Q2 2016

23.4

7.0

15.9

62.4

51.8

Q3 2015

23.0

6.7

14.0

60.8

48.5

QoQ Change

0.7%

0.8%

-17.8%

4.0%

3.2%

YoY Change*

2.1%

5.4%

-7.2%

6.9%

10.2%


  
At first glance the quarterly performance appears exceptionally strong but we’d caution that some volatility in the data is complicating this picture from the quarter. Specifically, imports slumped in the quarter (falling 8.6% as a result of lower business service imports – notably research and development and intellectual property) which accounted for a lot of the strong performance. 

Secondly capital spending was down 18% in the quarter after the massive rise of 37% the quarter before. This had a negative impact on domestic demand which now looks flat over the past twelve months. In spite of this we remain of the view that domestic demand (consumer spending and investment) remains the key tailwind for the Irish economy over the next couple of years. 

Today’s release may result in some modest upgrades to growth forecasts for 2016 but in our view doesn’t change the medium term picture for the Irish economy all that much. Overall the outlook for the economy remains strong over the next couple of years, underpinned by a promising outlook for consumer spending and business investment. 

Tom McCabe, Global Investment Strategist – December 9th 2016