14/8/15: Individual Consumption and the Irish Crisis

Couple of interesting charts showing the latest annual data on individual consumption in the EU.

First, volume indices of real expenditure per capita in PPS (with index for each year set at EU28=100) (these figures are adjusted for inflation and exchange rates differences.

The chart shows how growth in consumption in the EU28 over time was coincident with decline in relative position of Ireland in terms of individual consumption throughout the crisis period. In 2003-2004 Irish individual consumption stood 8 and 7 percentage points above EU28 average. This was marginally below the EA12 average. In 2005-2007, Irish individual consumption grew faster than consumption for EU28 and EA12, rising to 110 in index terms, or 10 percentage points above the EU28 and roughly 2 percentage points above the EA12. Since 2008, however, Irish individual consumption fell both relative to EU28 and EA12 figures. In the second year of 'robust recovery' - 2014 - Irish individual consumption (adjusting for inflation and exchange rates differences) hit the period low of 93 - full 7 percentage points below EU28 and 14 points below EA12.

As the result of the crisis, our real consumption per capita was down 16.2% on 2007 levels, which is the second worst performance after Greece (down 17%). Our performance was much worse than a 13.6% decline registered in the U.K., 10.6% decline registered in Iceland, 9.9% drop in Cyprus, 9.7% decline in the Netherlands, 8.2% drop in Spain and so on.

In nominal terms (without adjusting for inflation), our individual consumption record was equally abysmal (comparing only euro area states to remove distorting effects of exchange rates variation):

In summary, even after the onset of the 'fastest recovery' in the euro area, Ireland's actual individual consumption of goods and services remained au-par. In 2014 itself, our individual consumption grew 6.0% y/y - second fastest in EU28 after Luxembourg - but years of past devastation meant that our consumption remained second worst hit compared to pre-crisis levels. In 1999, Ireland ranked 12th in terms of individual nominal consumption in the EU 28 group of states. Our best year was attained in 2008 when we ranked 3rd. In every year between 2011 and 2014, we ranked 11th. In simple terms, the entire history of the euro area membership for Ireland has been equivalent to, largely, standing still in terms of our relative wellbeing compared to other EU states. 

23/9/2013: A summary of changes in the Irish GDP: 1970-2012

Summary of the changes in Irish GDP composition over 1970-2012 period (all in current market prices terms):

I marked in red bold those components that perform at their worst historical comparative in 2010-2012 period and in green bold those that perform at their historical best, as per their contributions to GDP.

Notable aspects of the above table:

1. The 'greedy decade' of the 2000s was actually distinguished by the lowest share of the economy accruing to personal consumption of goods and services - the Range Rovers of South Dublin didn't really cause the bust, folk...
2. Government spending rose, as a share of economy, in 2010s compared to 2000s and reached above the levels recorded in the 1990s, albeit still below the disastrous years of the 1980s.
3. Gross fixed capital formation has been demolished in the 2010s by the crisis, although its peak during the excesses of the 2000s was still lower than in the 1970s.
4. Exports of goods and services outstripped imports of goods and services, resulting in the net exports hitting their peak in the 2010s. Some 46 percent of our net external trade went out of the window as profits expatriated by the MNCs (and that is after we also account for profits on-shored into Ireland by Irish companies and investors).
5. Oh, and the fabled EU subsidies - well, these have been drained (note, these subsidies are reflected here gross, without accounting for EU taxes paid).