Friday, September 20, 2013

20/9/2013: Domestic Economy: Continuing Its Sextuplet Dip in Q2 2013

Total Domestic Demand is defined as :

  • Consumer Spending on goods and services + 
  • Government Spending on Current (as opposed to capital) goods and services + 
  • Gross Fixed Capital Formation (basically gross investment) + 
  • Change in Stocks of goods and services in the economy. 

In a more old-fashioned way, it is Investment + Consumption + Net Government Spending.

Put differently, this is the domestic economy (excluding exports net of imports, and outflows of income to the rest of the world net of inflows of income from the rest of the world).

Now, here are the quarterly changes in the domestic economy from 2007 on, for real (constant prices) seasonally adjusted series:

I define 'dips' in the above series similar to the official definition of a recession: two consecutive q/q downward movements. Remember, we have been told since Q2 2010 that the Irish economy has 'stabilised' and even 'returned to growth'. Since then we had: eight quarters of contraction and four quarters of growth in Total Domestic Demand.

The two core drivers downward in the domestic economy on q/q basis are:

On the good news side, q/q increase in Personal Consumption component (above) and external trade (below):

And external trade showing strong performance on q/q basis, which, alas, only partially offsetting the decline recorded in Q1 2013...

And this concludes my analysis of the QNA for Q2 2013.

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