Economy (GDP) shrinks by only 1% in 2010 (is the worst over?)

mike65

and by 2.1% as measured GNP

http://www.irishtimes.com/newspaper/breaking/2011/0324/breaking23.html

The figures follow respective falls in GDP and GNP in 2009 of 7.6 and 10.9 per cent.

The Central Statistics Office said GDP fell 1.6 per cent in the final quarter of the year as consumer spending, exports and investment all declined.

Consumer spending fell by 0.4 per cent on the quarter and investment was down 2.3 per cent. Exports fell by 1.4 per cent in the fourth quarter and imports were 0.1 per cent lower.

The CSO said net exports grew by 24.5 per cent, or €5.7 billion, last year but other areas shed some €7.9 billion.

Industry - excluding construction - grew by 13.2 per cent last year but that this was not enough to offset declines in other sectors of the economy.

So can we now look forward to bumping along the bottom then slight but steady growth?

later12

No, this quarter was weaker than expected, in no way is the GDP figure good news in any way, shape or form.

However to qualify that, and indeed before the 'musha, doom' brigade jump in on these figures it is worth bearing in mind that this was the quarter where Ireland applied for external assistance in the IMF and the EU, and where the situation got so bad that an election had to be announced to quell public anger at the state of the economy, and where what was apparently the toughest budget in the history of the state was introduced. So while these figures are not good news, neither are they at all a surprise.

The next stage should be a write down of the forecasts into 2011 in line with the IMF's figures.

Dannyboy83

A) Nothing has been done to fix state sector spending yet
NAMA is still trying to prevent property returning to normal
C) Banks are still not giving mortgages.
D) Fuel costs going a bit feckin mad.

We moving out of the dramatic collapse zone, and into the stagflation zone

dynamick

forecasts from Dec 2009:
Comparison of Macroeconomic Forecasts for Ireland for 2010
Annual % change
Institution|Publication|GDP|GNP|HICP|Employment
Department of Finance|Budget 2010 |-1.3 |-1.7 |-1.2 |-3.4
Central Bank of Ireland|Bulletin No.4, Oct 2010 |-2.3 |-3.1 |-0.5 |-4.4
ESRI|QEC Autumn 2010 |-1.1 |-1.7 |-0.7 |-4.1
EU Commission |Autumn 2009 Forecasts |-1.4 |n.a. |-0.6 |-3.9
OECD |Economic Outlook, November |-2.3 |n.a. |-0.7 |n.a.
Consensus |Reuters poll, end-November |-1.1 |-1.9 |-0.4 |n.a
Actual |2010 results:|-1% |-2.1% |-0.2% |-3.4%
So the results for the year are in line with predictions (a flat year)

source: http://www.budget.gov.ie/Budgets/2010/Documents/Final%20SPU.pdf

gurramok

Has GNP fallen quarter on quarter consistently? Has GNP ever risen quarter on quarter since the recession began?

The last line is quite on the mark

The figures show an increase in the level of multi-national profits flowing out of the country but interest payments on Government debt also increased.

ei.sdraob

@gurramok we have been in recession officially for 45 or so months now
I think Ireland will get its own chapter in economics books at this stage

dynamick

gurramok wrote: »

Has GNP fallen quarter on quarter consistently? Has GNP ever risen quarter on quarter since the recession began?

quarter on quarter constant market prices seasonally adjusted GNP rose in q2, q3 qnd q4 2010.

hmmm

Not a bad result after a hugely deflationary budget.

ashleey

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0BzPiIoPVJ2alYzIzNDZmMjktODg1Mi00Y2Q5LWI0YTktYTJiZGM1ZDQ2YjU0&hl=en&pli=1

Hopefully this transposes, but it shown that GNP is now below that of the start of 2005 courtesy of Stephen Kinsella.

http://www.stephenkinsella.net/2011/03/24/todays-gdp-and-gnp-data-visualised/

So that's 6 years of 'progress' down the drain then. Now bear in mind that the eu/IMF money is supposed to be paid back in the next 7 years or at the least, serviced like an interest only mortgage and you can see why people are leaving.

johnnyskeleton

At a very simple calculation, take our current GNP and subtract the cuts in government spending then add any increase in domestic activity. Vary by your view on whether multinationals will continue/increase/decrease the profits they funnel through our country (and in that regard, our low tax and lack of regulation systems are under pressure from the EU) and you will have an answer.

My view is that domestic consumption will at best remain static or decrease a little bit, so GNP will go down by at least the level of budget cuts. GDP could really do anything depending on whether MNCs leave Ireland, more come into Ireland, the same ones bring more profits into Ireland or they just sit tight and remain about the same.

dynamick

Given that the consensus estimates for GNP, GDP and employment in 2010 were fairly accurate, what do they predict this year?

Group|Date|GDP|GNP|HICP|Employment
Department of Finance|December 2010|1.7|1.0|0.7|-0.2
Reuters Consensus|December 2010|1.6|1.0|0.6|n.a.
EU Commission|November 2010|0.9|n.a.|0.4|-0.8
OECD|November 2010|1.5|n.a.|0.9|n.a.
Central Bank|October 2010|2.4|1.7|1.1|-0.4
ESRI|October 2010|2.3|2.0|0.5|-0.5

indicating that the consensus view is that the worst is over the economy will grow in 2011 and that employment will only fall by a fraction of the fall in 2010.

ei.sdraob

dynamick wrote: »

indicating that the consensus view is that the worst is over the economy will grow in 2011 and that employment will only fall by a fraction of the fall in 2010.

Consensus view was once upon a time that house prices will ever go up and we will have a soft landing.

What sort of a recovery will there be if the corporation tax system changes and/or doubts about it continue to linger.

Euroland

mike65 wrote: »

Economy (GDP) shrinks by only 1% in 2010 (is the worst over?)

Yes, as for the economy in general the worse is over, but for the public finances and for the bank debt is still not, far away from it.

ashleey

The level of corporation tax is a red herring. The elephant in the room (to continue the metaphors) is that with national income down to that of 2003, and personal disposable income lower still due to recent tax rises (marginal rates around 50%, average rates around 30%+), it is impossible for the tax base of Ireland to generate the revenue required to service the debt, even before next week's stress tests point to another 30bn odd requirement for the banks. You may as well make corporation tax 200%.

The debate needs to be moved look at the facts. Take income, take debt, take debt repayments, on a national level and analyze the numbers. Water charges or corporation tax won't make a dent in these numbers in a thousand years at the same time as trying to gain 'competitiveness' with falling wages. That is why the market won't buy Irish bonds and won't give money to any Irish govt. guaranteed bank until tomorrow morning.

Unfortunately, the only solution is to close down the existing Irish banking system. Go into a creditors meeting to discuss repayments and start a new system afresh with 1 bank to start with. It won't be pretty for a year or so but how can anyone say that the existing situation is 'pretty'? The ECB will be in line for a hammering and the 'new' Irish bank will effectively start like a small credit union for a while but there's no way we can go around like the last 6 years didn't happen and expect to get away with it.

Then if the famed multinationals really are committed to Ireland they will slowly fill the void. It will take some serious grovelling in the US and Europe but that's why we have a new govt. If they get tough and serious on those of past corruption, because let's be realistic the Anglo Golden Circle didn't ring each other up spontaneously to save Anglo and Quinn, then they will get sympathy. Currently, there is zero sympathy abroad when the Irish govt. and civil service earn multiples of their European paymasters and are too spineless or worse to clear out the past.
(Sorry, Friday rant over)