Thursday, March 13, 2014

13/3/2014: GDP down, GNP up... as 2013 economic recovery goes up in a puff of statistical smoke

CSO released QNA for Q4 2013 and I will be blogging at length on the core results, so stay tuned.

Here is the release link:

And the key highlights:

Q4 2013: GDP down 2.3% q/q on seasonally-adjusted basis, in constant prices terms. This fully erased a 2.1% rise q/q recorded in Q3 2013, while 1.1% rise q/q in Q2 2013 was not enough to cover a decline of 1.4% in Q1 2013… Overall, annual figure fell (more on that below).

Since the official end of the Great Recession in Q1 2010, we had 9 quarters of rising GDP and 7 quarters of falling GDP.

As a result, constant market prices terms (2011 prices), GDP in Ireland now stands at EUR 162.303 billion, which is below 2011 and 2012 levels. Officially, there is no recession. Practically, GDP is shrinking.

The good news is that GNP is growing as MNCs are not expatriating profits from the land of transparent corporate taxation, so 2013 real GNP sits at EUR 137.476 billion, up strongly on EUR132.984 billion in 2012 and above the levels recorded in 2009-2011.

Decomposing the above aggregate changes:

Taxes less subsidies rose to EUR15.223 billion in 2013 from EUR14.811 billion, contributing EUR412 million to 'growth'. Taxes are snow back to levels just below 2010 which should make our trade unionists rejoice, somewhat.

Stripping out state capture of the economy, GDP at constant factor cost fell EUR965 million in 2013 compared to 2012 and is down on 2011 levels too (-EUR472 million). So much for the 'recovery', then…

Looking at sectors of economy:

  • Other Services, including rents (and including our hard working services MNCs) are up EUR1.958 billion in 2013 compared to 2012. This line of national income is now up to the levels just below those last seen in 2008. Much of this recovery, of course, is down to sales of ICT services around the world being booked into Dublin, but we shall deal with that aspect of our accounts separately.
  • Public Administration and defence is down EUR278 million y/y in 2013, and is now at the lowest level since 2008.
  • Distribution, Transport, Software and Communications sector is down EUR888 million to its lowest contribution level in any year of the crisis.
  • Building and construction sub-sector posted a rose in its contribution to GDP +EUR243 million in 2013 compared to 2012, and sector activity is up EUR52 million on 2011 levels, although it is still down EUR381 million on activity in 2011.
  • Industry, inclusive of building and construction is shrinking - presumably on foot of pharma sector woes. The sector in 2013 posted income of EUR39.341 billion, down EUR1.339 billion on 2012, down EUR1.664 billion on 2011 and down EUR724 million on 2010. In 2013, we have hit an absolute low in Industry sector despite some pick up in construction for any year of the crisis.
  • Remember 25,000 new farmers added in 2013 to our 'employment' figures? Well, they are working hard. Or rather prices inflation is working very hard in the sector. Agriculture, Forestry and Fishing sector generated increase in activity in 2013 of EUR237 million, which partially offset the decline in the sector fortunes in 2012. Still, 2013 levels of activity are EUR258 million behind 2011 levels and EUR316 million behind 2010 levels. The sector contribution to GDP in 2013 was the second lowest for the entire crisis period.

So here we go… recovery then… negative GDP growth (due to industry, distribution, transport, software and communications, and government activities shrinking, only partially offset by growth in other services, construction and agriculture, and rising taxes net of subsidies). Oh, and 25,000 new farmers adding on average ca EUR9,500 per person in annual output to the economy (remember - they are all gainfully employed, right?)...
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