Economics 17/12/10: Q3 2010 National Accounts - part 2

This is the second post on the QNA data for Q3 2010.

Let's take a look at three more dynamic sectoral components of GNP.
Services and industry are now pulling in different directions, which means the proverbial glass on growth is really half-full (or half-empty). Amazingly, construction sector continues to shrink. This is even better illustrated as the sector share of domestic economy:
Now, recall that PMIs for construction sector for November showed continued monthly contraction in sector activity, led by civil engineering (as the rest of the sector has already shrunk by well over 80%). 2011 forecast for new homes completion is now around 9,000 units - and in my view that too is rather optimistic. This means we can expect more bad news out of the sector with a continued knock on effect onto auxiliary services and materials sectors.

Taking a look at GDP and GNP in current prices terms:
For the second quarter in a row, the value of Irish exports was in excess of the value of the country GDP (by 2.94% in Q3 - down from 3.03% in Q2, while in Q3 2009 it was 11% below the level of GDP). Undoubtedly, weakening euro helped here.

Again, in current prices, consumers are still striking, while capital investment has gone even deeper into the negative territory, so that the very partial replacement of amortized stocks that gave it a temporary boost in Q2 before has been exhausted. Government spending is not showing much of a decline.
Take a look at quarterly rates of change in the above components:
We are now an economy that consumes its capital stock, not the one that adds to it for future growth.

Economics 16/12/10: Q3 2010 National Accounts - part 1

This is the first post analysing the latest Quarterly National Accounts data for Q3 2010 released today.

Let's take a big picture view first.
Both the GDP and GNP expanded in Q3, with GNP marking the second quarter of continuous expansion. Real GDP grew +0.5% qoq. Currently, GDP stands at 1.7% higher the lowest point in this recession so far (Q4 2009), but 0.694% below Q3 2009 in current prices. Cumulative Q1-Q3 GDP (seasonally adjusted, constant prices) stands at -1.21% below Q1-Q3 2010 GDP. In other words, year on year we are still in a recession.

Real GNP also rose qoq by 1.1% - a second consecutive quarterly rise following a tiny uplift of 0.1% in Q2. Since GNP measures our actual economy, netting out transfer pricing by the MNCs, it is worth taking a bit of a closer look at the numbers. Net transfers out of this economy, which includes remitted profits, rose 4.573% in Q3 in yoy terms. Over the first three quarters of 2010 this number is up 10.46% relative to 2009. As the result, our GNP was 1.77% below Q3 2009 level and the first three quarters cumulative GNP for 2010 was 3.7% below that of the same period in 2009. By any real metric, this is a raging recession, folks.

The good news from today's figures is that our exports are still growing, and in fact, are still driving economic growth. Total exports grew by 3.6% qoq, though that rate was 7.6% in Q2 2010 and 6.4% in Q1, which implies that Q3 posted a slowdown in exports growth. We now have three consecutive quarters of growth in exports. Which is brilliant news. Year on year, Q3 exports grew by 13.1%, while first three quarters of 2010 posted a rise in exports of 8.9% relative to the same period in 2009.

Irish exporters do deserve some serious praise here. And one other net positive is that we are finally seeing domestic economy benefiting from this exports growth, as evidence by the slight closing of the GDP/GNP gap.

But more on exports later.

As chart above shows, consumer spending and government spending were down, once again.

Consumer spending was down 0.544% qoq - the largest decline in year and a half. In yoy terms, consumer spending was down 1.38% and in Q1-Q3 cumulative terms, personal consumption was down 1.1% on 2009.

Government spending fell 5.053% yoy in Q3 (note that the same yoy decline in Q1 2010 was 6.082%, implying that Government performance on spending side actually worsened during the year), qoq Government spending fell 1.738% in Q3 2010.

Total domestic demand is down 1.7% qoq and 5.1% yoy.

But take a look at the comparatives for the dynamics of private consumption and Government spending since 2005. First, consider both expressed in constant prices:
And next, consider the same expressed in current prices:

In real (inflation-adjusted) terms, Government spending is currently between Q1-Q2 2006, while private consumption is between Q4 2005 and Q1 2006. A close comparison. Once we allow for inflation (in current prices terms), Government spending is currently between Q4 2006 and Q1 2007, while private consumption is between Q4 2005 and Q1 2006. Much less of a match.

Economics 24/9/10: Double Dip is now official

With a slight delay - here are the latest figures from the Quarterly National Accounts released yesterday.

The headline number is GDP double dip - Q2 2010 posted a decline in real GDP of 1.2%, deeper than the decline in GNP (-0.3%), signaling weakening side of the external economy.
In constant market prices and seasonally adjusted, Q2 GDP stood at €41,130mln down 1.81% on Q2 2009 and -1.21% on Q12010. Cumulative H1 2010 GDP was 1.28% below H1 2009. Despite shallower contraction in GNP, domestic income has suffered a much deeper contraction in the year to date. Quarter on quarter contraction in GNP between Q1 2010 and Q2 2010 was 0.278%, year on year GNP fell 4.05% in Q2 2010. H1 2010 GNP was 4.42% below H1 2009.

Let's put this into a perspective. Over the course of H1 2010, Irish economy lost €3,087mln in income. Per latest QNHS, there were 1,859,100 people in employment in the country, which means that our economic loss in H1 2010 amounted to €1,660 per working person. Since H1 2007, our economic losses total €13,078mln or €7,035 per working person. Annualized losses in national income now run at roughly €14,000 per working person since the Great Recession began.

The gap between GDP and GNP has narrowed as a result of horrific performance of GDP:
The slight recovery in GDP/GNP gap is, of course of little comfort.

Core components by sectors:

Spending and investment remain depressed: