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Current TrendsAnnual figures for GNP and GDP growth, consumer price inflation, employment, wage growth and other economic data, together with our current short-term forecasts, are presented in the Summary Table of the latest Quarterly Economic Commentary. Forecasts over a longer time horizon are available in Recovery Scenarios for Ireland and the Medium Term Review. The latest ESRI research on the Irish economy may be viewed on the Irish Economy Today page of our website. The authoritative source for most Irish economic data is the Central Statistics Office. Links to their latest publications for the main variables of interest are provided below: GNP, GDP (Annual): National Income & Expenditure Accounts GNP, GDP (Quarterly): Quarterly National Accounts Consumer Prices (Monthly): Consumer Price Index Employment (Quarterly): Quarterly National Household Survey For information related to the public finances, the Department of Finance publishes regular updates on exchequer returns and other budgetary data. OverviewIreland is a small, open, trade-dependent economy. It accounted for approximately 2.1 per cent of overall output in the Euro Area in 2007. Its openness is reflected in the international mobility of its labour and capital, demonstrated by strong migratory flows and high levels of foreign direct investment. Its high level of external trade is signalled by a high share of combined exports and imports in Gross Domestic Product (GDP) which was just under 150 per cent in 2007. In recent decades the Irish economy has been transformed from being agrarian and traditional manufacturing based to one increasingly based on the hi-tech and internationally traded services sectors. In 2007, the services sector accounted for 64 per cent of Irish GDP, while industry accounted for 33 per cent and agriculture just 3 per cent.
Economic Growth2010 is an ESRI estimate, see latest Quarterly Economic Commentary . Beginning in the early 1990’s, unprecedented economic growth saw the level of Irish real GDP double in size over the course of a little more than a decade. There have been many reasons advanced for Ireland’s success over this period, including EU membership and access to the Single Market; Ireland’s low corporation tax rate and a large multinational presence; a high proportion of the population of working age; increased participation in the labour market especially by females; a reversal of the trend of emigration toward immigration; sustained investment in education and training; co-ordinated social partnership agreements and a more stable public finance position.
The pace of economic growth decelerated in the second half of 2007, largely due to a contraction in housing construction. In 2008 it is estimated that output fell for the first time since 1983, and the recession deepened in 2009. House prices increased substantially in the late 1990’s and in the first half of this decade, and investment in housing as a percentage of GNP rose from around 6 per cent in 1996 to almost 15 per cent in 2006. Given this weight of house building in total economic activity, the slowdown in the construction sector has acted as a significant drag on overall economic growth. In addition, the difficulties in the international financial markets that emerged in 2007, and worsened throughout 2008, have compounded Ireland’s economic and financial challenges. The global credit crunch and the associated recession in the economies of all of our major trading partners has resulted in the collapse of Irish export growth. Consumer Prices2010 is an ESRI estimate, see latest Quarterly Economic Commentary In terms of price developments, the rapid growth in the economy resulted in high levels of CPI inflation in the first few years of this decade. Inflation slowed in 2004 and 2005 but rising interest rates and soaring commodity prices, together with the boom in construction, contributed to higher inflation in 2006 and 2007. Oil prices peaked in July 2008 at over $140 per barrel. However, as the global recession took hold in the second half of 2008, commodity prices fell substantially and interest rates were slashed. As a result, the average price level began to fall. While inflation averaged 4.1 per cent in 2008, consumer prices have been falling since the last three months of 2008. For 2009, it is estimated that consumer prices fell by 4.5 per cent.
Unemployment2010 is an ESRI estimate, see latest Quarterly Economic Commentary . Ireland’s remarkable growth performance throughout the late 1990’s and into the first half of this decade had strong positive implications for employment growth. The total number of people employed rose from 1.2 million in 1990 to 2.1 million in 2007 – an increase of 75%. The rate of unemployment dropped to historically low levels in recent years, averaging 4.5 per cent in 2007. This period also saw a reversal of the trend of emigration that characterised the 1980’s, and a net inward migration of over 67,000 was recorded in 2007. The current economic downturn has already manifested itself in the labour market. The number of people on the Live Register increased by 70% in 2008. The average rate of unemployment for 2009 is estimated to have reached almost 12 per cent, and is expected to rise further in 2010.
Public FinancesThe strength of the Irish economy in recent years contributed to healthy public finances. In 2006, a General Government Surplus of 3 per cent of GDP was recorded. However, the current downturn has seen the public finances move into deficit at an alarming pace. Taxation policy in Ireland over the last ten years has led to a structural rise in the importance of capital taxes as a source of revenue. As a result, the downturn in the property market has led to a sharp reduction in tax revenues. The situation worsened throughout 2008, as the slowdown in the residential sector spread to other sectors of the economy, affecting both consumption and employment and therefore leading to a more general slump in tax revenues. The implications for the borrowing requirement have been severe, with the General Government Deficit reaching 14 per cent of GDP in 2009. It is estimated that the level of national debt may have exceeded 41 per cent of GDP in 2009, up from 12 per cent in 2007.[1]
For the latest analysis and short-term forecast for the Irish economy see the Quarterly Economic Commentary. For a medium-term forecast for the Irish economy see Recovery Scenarios For Ireland and the Medium-Term Review. The data underlying the above graphs can be found by clicking on the link below. [1] These national debt figures are net of the Pensions Fund and Social Insurance Fund. 2010 is an ESRI estimate, see latest Quarterly Economic Commentary .
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