Irish economic growth of 7.8% tops euro zone again

Thursday 10 March 2016 23.18
GDP growth of 7.8% makes Ireland the fastest growing economy in the euro zone for the second year in a row
GDP growth of 7.8% makes Ireland the fastest growing economy in the euro zone for the second year in a row

New preliminary figures from the Central Statistics Office show that GDP increased by 7.8% for the whole of 2015 - the fastest pace of growth since 2000.

This made it the fastest growing economy in the Europe Union for the second successive year after growth accelerated sharply in the final three months of the year.

The Government had forecast that growth for last year might exceed 7%, and in January the Central Bank had said it expected GDP to be 6.6% for 2015. 

The economy expanded by 2.7% on a quarterly basis in the three months from October to December, up from 1.5% in the previous quarter, the Central Statistics Office said.

The CSO also said that GNP showed an increase of 5.7% last year compared to 2014.

Today's figures show that manufacturing industry recorded an annual 14.2% increase in value terms, while building and construction recorded an 8.8% rise.

The distribution, transport, software and communications sector increased by 8.7% while the agriculture sector increased by 6.4%, and other services by 4.3 per cent. 

However, public administration and defence recorded an annual decline of 2.6%.

Personal consumption, which accounts for 55% of domestic demand, rose by 3.5% during the year, while government expenditure saw a slight decline over the same year.

Total domestic demand increased by 9.3% in 2015 compared with 2014.
 
The CSO also said that import growth of 16.4% outpaced that of exports at 13.8%. 

Separate figures from the CSO show the country's balance of payments current account - a measure of Ireland’s financial flows with the rest of the world - had a surplus in the fourth quarter of 2015 of €2.773 billion. 

The current account surplus for 2015 was €9.548 billion an increase of €2.715 billion on 2014. 

The CSO said that the annual services deficit increased by €12.177 billion while the merchandise surplus increased €22.268 billion.

Commenting on today's figures, Merrion economist Alan McQuaid said it is quite clear that the Irish economy continues to go from strength to strength, easily topping both the euro zone and EU growth league tables in 2015.

"GDP growth last year was almost a full percentage point higher than the 6.9% posted by global-powerhouse China," Mr McQuaid noted.

"Already the indicators for the early part of 2016 point to another very good year ahead for the Irish economy despite some global-headwinds. At this juncture we expect GDP growth of somewhere between 5% and 6% in real terms this year, again the best performance in Europe," he added.

Meanwhile, Goodbody economist Juliet Tennent said that while Irish GDP data are notoriously volatile, it is important to highlight that the significant outperformance of the Irish economy was a constant feature throughout the year.

She said that trends in the domestic economy are "exceptionally strong" and confirms that the expansion is now very much broad-based. 

KBC Bank Ireland's chief economist Austin Hughes said that the strength of today's numbers, coupled with strong and broadly based momentum in the final quarter, means it will increase its forecast for GDP growth in 2016 - previously set at 4.5%. 

"An increasingly uncertain global climate means we feel it prudent to err on the side of caution in respect of the likely 2016 outturn but even taking a conservative approach implies GDP growth of about 5% should be readily achieved this year," Mr Hughes said.