Monday 5 December 2016

Growth surges past boom levels to five times EU average - CSO

Published 11/03/2016 | 02:30

Students from Galway Technical Institute (GTI) exhibiting some outfits in a LIVE windows show at Anthony Ryans on Shop Street in Galway City. The exhibit is part of GTI’s Fashion Fiesta 2016.
Students from Galway Technical Institute (GTI) exhibiting some outfits in a LIVE windows show at Anthony Ryans on Shop Street in Galway City. The exhibit is part of GTI’s Fashion Fiesta 2016.

The Irish economy grew at the fastest pace since 2000 last year accelerating five times quicker than the Eurozone average.

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Preliminary figures from the Central Statistics Office (CSO) confirm that Ireland was by far the fastest growing economy among European peers in 2015.

The standard measure of economic activity gross domestic product (GDP), ended the year up 7.8pc while gross national product (GNP), which excludes some activities of multinationals, rose 5.7pc.

The figures beat most expecations, but economists have warned than real growth may be slower than the headline figures suggest.

"There are certainly distortions emanating from the multi-national sector. Looking at just the domestic economy, full-year growth was closer to 4pc - the headline figures are probably overstating the reality," said Dermot O'Leary, chief economist at Goodbody Stockbrokers.

That gap may help explain why Fine Gael's election campaign slogan to "keep the recovery going" failed to resonate with many voters.

However, even looking just at the domestic sectors Ireland is still the fastest growing economy in the Euro area, Mr O'Leary said.

By comparison, growth across the 19 members of the Euro area was well under 2pc last year.

Ireland's balance of payments is increasingly positive, meaning that we are making more as a country than we spend.

By the end of the year €9.5bn more had come into the country than was paid out from Ireland to the rest of the world.

Unlike 2007, when construction was the dominant sector for investment, last year services and other so called intangibles, as well as purchases of machinery and equipment, drove investment.

Domestic demand was the primary driver of growth, with net exports little changed.

In Ireland, industry's 14pc increase last year made it the biggest growth sector.

Gross domestic product rose an annual 9.2pc in the fourth quarter. From the previous quarter, the economy grew 2.7pc, from a revised 1.5pc in the third quarter.

Most experts expect growth to continue strongly this year, unless there are new shocks.

"If Britain were to vote to leave the EU, then it would have serious negative implications for Ireland, " said Alan McQuaid, chief economist at Merrion Capital.

"The Brexit threat only highlights the urgency to put an Irish government in place as soon as possible," he said.

The latest growth means headline debt as a percentage of GDP may have fallen as low as 94.5pc at the end of last year, down from 107.5pc at the end of 2014.

That is a significant boost to debt sustainability, Mr O'leary said.

Under Eurozone rules debt has eventually to be cut to 60pc of GDP.

Irish Independent

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