CSO Updates

The CSO have published the Q4 2014 Quarterly National Accounts which provide us with the first  full-year estimates for 2014.

Real GDP growth in 2014 is estimated to have been 4.8 per cent. Real GNP expanded by 5.2 per cent.

Nominal GDP grew by 6.1 per cent and now stands at €185 billion.  Real GDP growth was 0.2 per cent in Q4 2014 compared to previous quarter.  The Balance of Payments shows a current account surplus equivalent to 6.2 per cent of GDP (€11.5 billion) for 2014.

As per usual there is likely a lot happening under the surface of the headline figures with factors like contract manufacturing and re-domiciling PLCs impacting previous figures.

Prices rose 0.6 per cent in February but annual inflation remained negative at –0.4 per cent.

34 replies on “CSO Updates”


It would be incredibly useful if you could give us a sense of where the debt/GDP figures stand right now and your best guess for where they might be in a couple of years if growth continues to exceed expectations. The net national debt is around 180 billion right now I think?

@ JF,

The figures are being impacted by the IBRC at the moment which is included in the general government sector under revised national accounting rules. By the end of the year it is likely that most of the IBRC liabilities had been repaid so things may clear up this year. But getting a clear handle on things at the moment is not easy as the reclassification as meant there are some odd-looking numbers on the financial sectoral accounts.

Gross general government debt probably ended the year somewhere around €204 billion (with maybe €1 billion due to liabilities in the IBRC). This would put it at 110 per cent of GDP. The IBRC seems set to be liquidated for a surplus. This means will we get back €1.1bn paid out under the ELG and whatever amount the surplus is. This would put a notional debt measure excluding the IBRC at something around 108 per cent of GDP.

After that we have the cash reserves and other near cash assets held by the NTMA. These were €11.1 billion at year end. Then you have the various banking assets in public ownership which will be sold/liquidated. They are probably worth close to €20 billion now and may realise more when they are sold. Those two factors alone would bring a net debt measure down to around 90 per cent of GDP.

There are lots of other factors. The Central Bank holds over €25 billion of government bonds from the IBRC liquidation and recycles the interest back to the Exchequer. The state-owned banks also own a significant amount of government bonds.

It’s a bit of a guess but the debt ratio will likely be in the range of 75-80% of GDP by the end of the decade. This depends on lots of things namely growth, inflation, asset sales and policy choices(!). As cash reserves are wound down and banking assets are sold net debt (excluding various standard government assets) is likely to be close to the same range.

This year could be incredible for the Irish economy. The fall in the euro alone is extra ordinary considering the euro wide trade surplus. It’ll mean a lot more holidays to Ireland being planned this year and an even bigger trade surplus locally in Ireland. Though it could bounce back fast if European growth accelerates and or inflation picks up.

Wages up ever so slightly too. If we see more growth there, I’ll be firmly in the bullish on Ireland camp.

All we need now is to start building proper housing for people.

The only industry likely to suffer in the year ahead is the doom porn one. It must have been making up 30% of Ireland’s economy till a year or so ago.

JTO is going to have an orgasm. He’ll predict growth into infinity and then post to some prediction of Morgan Kelly that didn’t work out.

All will be pleased to know that Ireland’s growth figures have made the headlines on the Thailand tv channel I’ve just been watching in my Phuket hotel room, along with the fact that Ireland’s growth rate in 2014 was the highest in Europe.

I’d be very confident that the final growth figures will eventually be revised up to 6% plus. They nearly always are revised up and the revisions are particularly marked during periods of high growth. During the Celtic Tiger Mark 1 years, the initial estimates for GDP/GNP growth were invariably revised up by anything from 1% to 3%.

It will no doubt be claimed that the growth is due to ‘contract manufacturing’. But this is a nonsense. Any distortions in manufacturing output caused by ‘contract manufacturing’ are eliminated by the CSO by the time they are included in the GDP/GNP growth figures. Thus, the CSO industrial output figures showed manufacturing output up 20% in 2014, but today’s GDP/GNP figures show industrial output up just 2%. I’d be very confident this will be eventually revised up. The growth is also confirmed by the employment figures and the tax receipts figures.

I can’t see for the life of me the slightest indication that GDP/GNP growth will be lower in 2015 than in 2014. All indications so far are that growth accelerated in the early months of 2015.

It looks as though real GDP/GNP will be 3% to 5% higher in 2015 than in the previous peak year of 2007.

A good bet with Paddy Power would be on Ireland having the highest growth in western Europe over the decade 2007-2017. What would the odds on this happening have been in 2010? But, it looks very possible now.

It would also be useful to normalise the cash buffer & identify how much Sovereign Debt will be owned by CB since those coupons go in front door and out the back door back to Merrion St.

Nominal GDP deflator is no the same as the CPI and rose by 1.3% in 2014.

Debt was €203.2bn at end-14 according to DOF and ratio was 110.5%. That was predicated on GDP of €183.8bn. latter is now €185.4bn so ratio is 109.6%

Domestic demand rose in 2014 after 6-year fall but consumer spending still undershooting forecasts, albeit decent rise in q4. Consumption as a percent of GDP now at 10-year low.

It’s as irrational to say that there are no distortions as it is to say that there is no recovery.

1) The CSO does not provide an estimate of the impact of tax inversions on GNP and Balance of Payments:

2) Fourth quarter goods exports were up 27% on Q4 2013.

In the past BoP merchandise data used be about €5 billion lower than the trade statistics total to correct for double counting in respect of exports and reimports. In 2014 merchandise exports in the BoP are €18 billion above giving a net goods exports rise of €10 billion.

In services with the ‘Double Irish” impact, a rise in royalties has resulted in a deficit.

We don’t know if this is related to pharmaceuticals or increased charges in services companies.

Industry in the national accounts is a net total and is broader than the monthly report focus which is on manufacturing industry.

The Irish economy declined sharply for at least 4, possibly 5 years. Nett, we ‘lost’ or regressed about a decade. So, any positive G*P values have to be placed in that context; but values at +4% seem a tad elevated. They’re possible, but I’d consider them questionable. A recent comment on zerohedge put our total debts to GDP at 390% – is this correct?

If median incomes in different sectors were advancing at a steady 4% or so then you might expect G*D to parallel that. Not so, so caution is advised. Increasing incomes usually predict an increase in consumer spending which is a plausible proxy for an increase in G*P.

The fall in the euro may be welcomed, but we will catch it in the neck if oil prices were to increase – which, hopefully, may be a few years away. Then there are those v-low interest rates. They should be approx x10 times higher than they are. That is definitely abnormal.


One of the factors behind Sinn Féin’s decision on Monday to pull out of the Stormont House Agreement was a series of trade union demonstrations tomorrow calling for rejection of the agreement.

All major public sector unions in the North will be on strike. Most schools and, it is expected, all social security, Housing Executive and civil service offices will be closed. No buses or trains will run. Marches and rallies opposing the economic components of the agreement will be held in Belfast, Derry, Strabane, Enniskillen, Omagh, Magherafelt, Cookstown, Dungannon and Craigavon. (Interest declared: I represent the NUJ on Derry Trades Union Council.)


Any thought on the under recording of on line consumer spending, is the q4 surge real or is it a catch up on under recording. C/G*P would be low if you were failing to measure it correctly.
The surge in net exports is also noteworthy as there is a monster pharma pipeline to come in 2016-18.
Given the Debt/GDP ratio is 110%, what is it I) ex the cash buffer II) ex the CB holdings and where is this ratio going to go over 2-3 years. Clue, look down. Then there is the putative sale of AIB?

Good numbers and hopefully they can continue but no time for crowing because there is a lot of uncertainty out there. CBs don’t know what if any impact extreme monetary policy has on the real economy. Markets tearing the ar$e out of the latest asset price boom remain the biggest risk.

“Markets continue to assume that the authorities will backstop asset prices. But weakened public finances and policy options exhausted in fighting the last crisis limit the ability of governments to respond to a new crisis.”

110% of GDP doesn’t have much margin, improved and all as it is.

If the debt is ~100% of GDP and a large part of it can be pushed into the 1-1.5% long bonds now around, then it can be serviced and can hopefully be whittled away.

Dublin is booming but here in Sligo more shops close and the empty apartments are still empty. No decent jobs available for our young people. Economic recovery is, I suspect, limited to the greater Dublin area and maybe only to parts of that but the government deserve a modicum of credit and hopefully the rest of the country will follow. Grade: good but needs to work harder!

Why is inflation negative? Is this a once off or a structural issue ? If the latter, what will it mean for debt sustainability ?
What are the main drivers of growth ?

Good GDP figures, but who is the growth for and into whose pocket is it going?

Economics 101 Question:

A. Employment up less than 1% (.6%): Q4 2013 1,927,000; Q4 2014 1,938,000.

B. Average Wage Growth up 2.3%: Q4 2013 €688pw ; Q4 2014 €704pw.


C. GNP growth is 5.2%.

Rationalise and discuss.


Did Ireland’s 12.5 Percent Corporate Tax Rate Create the Celtic Tiger?

Posted on March 12, 2015 by Yves Smith

Yves here. Offshore banking and tax haven expert Nicholas Shaxson has launched a new blog, Fools’ Gold, to look at issues of ‘competitiveness’ and so-called ‘competition’ between nations. We’ve often taken issue with that policy goal, since it gives precedence to crushing labor as a way of lowering product prices to stoke exports. This approach is dubious for anything other than small economies, since all countries cannot be net exporters. Undue focus on exports as a driver of growth results in increasing international friction, such as the currency wars that are underway now. Moreover, as we have discussed separately, trade liberalization has gone hand in hand with liberalization of capital flows, in no small measure due to US efforts to make the world safe for what were then US investment banks. Yet Carmen Reinhardt and Ken Rogoff pointed out in their study of financial crises, higher levels of international capital flows are associated with more frequent and severe financial crises.

In addition, lowering wage rates reduces domestic demand. In countries like the US, where the domestic economy is much larger than the export sector, lowering internal demand to stoke exports is misguided. Here we look at a first case study, the real reasons behind the growth and meltdown of the famed Celtic tiger, Ireland.


some further points:

Gross debt in 2014 was estimated at €203.2bn by Finance and GNP is now put at €158.4bn so the ratio is 128.3% versus 109.6 on the GDP measure.

Note that the Gross debt figure changed last year following the move to a new set of national accounts, ESA 2010. That boost that gave to Irish GDP has been well covered but another result was that IRBC’s liabilities were added to the general Government debt, back to 2011,which initially inflated the numerator but the liquidation and sale is now also impacting the debt figure. Finance assumed the IBRC liquidation would reduce the debt ratio in 2014 by over 6 percentage points but that may now turn out to be pessimistic given Noonan’s recent comments on the proceeds from the liquidation.

As for the underlying debt dynamics. the average interest rate on Ireland’s debt this year is forecast at 3.5% and is projected by Finance to rise marginally over the next few years, which may be pessimistic. So if nominal GDP growth averaged around 5% or so the debt ratio will fall by 1.5 percentage points a year, even with a primary balance, although Ireland is projecting to run a rising primary surplus which would reduce the debt ratio at a faster clip. Any asset sales could obviously impact it further.

As for Tull’s point on consumer spending I think it is a deflator issue. The value of retail sales ex cars went up by 1.6% in 2014 or by 3.7% in volume terms i.e. prices fell by 2%. the value of consumption spending in the national accounts actually rose by 2.7% but only 1.1% in volume terms so prices here went up by 1.6%. The latter mainly reflects rents I suspect; imputed rents accounts for over 13% of consumer spending in value terms.

n.b. just thinking about that IBRC issue- to the CB IBRC was a bank and hence qualified foe ELA but to Eurostat it was (at least retrospectively) part of General Government so the CB should not have been lending to it at all !

203.2 bn is a shocking amount of debt, really.
It was run up in a matter of a few years. If the ECB weren’t so kind on interest rates it would be crucifying. But low interest rates bring other problems.

@ David O’Donnell

It should be possible to recognise that foreign direct investment was crucial in the modernisation of the Irish economy while also recognising that the availability of ready made American jobs eased pressure on policy makers to focus on development of the indigenous sector.

In the post-war period it has been unique for poor countries without significant natural resources to become relatively rich, through embracing globalisation and becoming a location for exports.

Greece is the most closed economy in Europe, in effect the region’s worst exporter:


There is a problem in in Ireland where food production is important but a typical farmer relies on CAP subsidies for almost 80% of household income and very low land transactions result in the price of agricultural land being among the most expensive in the world and four times the level of France.

Moving on from 2014 to 2015, nearly every economic forecaster (including the government) is forecasting that Ireland’s GDP/GNP growth in 2015 will be lower than in 2014. Frankly, I think this is nuts. The idea that, uniquely in the Eurozone, the combination of (1) 50 per cent fall in oil price (2) 20 per cent fall in euro v sterling and dollar (3) quantitative easing in Eurozone is going to lead to a slowdown in economic growth in Ireland in 2015, as compared with 2014, is bananas. A further acceleration in growth is far more likely. And the early stats for 2015 confirm this.

@Michael Hennigan

This blog highlights the lack of focus on ‘real’ indigenous industrial economics ……

…. the blog, similar to much of the known universe, has been FINANCIALIZED …

… also evident in student numbers and industrial areas of focus in the Universities and ITs … (a few exceptions).

The ‘cows’ have been deemed much much more important than the ‘spalpeens’ in rural Ireland, and the corridors of power, since the switch from grain to beef in the very early 19th Century. Yer neighbour, de Cork Minister and his Brudder continue the tradition … as do de Brutons … nor is Sinn Fein immune from these historically bred sacred cows ….

Land tax anyone? Cow tax anyone?

We need more of Frank Barry and more industrially savvy, like yer good self, on the blog …. and real success stories in the indigenous do exist …. we get little newz on that front around here ………….. rent seekers and financial system free riders and spinners …. etc.

Spanners not Spinners …..

Roll on Wales and Pakistan!

The stupidest comment by far on Thursday’s figures has come from Enda Kenny. Speaking in Atlanta, he compared Ireland’s current growth with that of the Celtic Tiger. He claimed that the Celtic Tiger growth was a ‘veneer’, a ‘charade’, and based on one industry ‘constructuion’. He contrasted this with the current situation in which all sectors are growing.

This, of course, is absurd tosh. If Kenny checked his facts, he’d find that between 1986 and 2011 manufacturing output in Ireland rose by 600 per cent, compared with 20 per cent between 2011 and 2014. Annualised, average annual manufacturing growth in the Celtic Tiger era was over 12 per cent, compared with 6 per cent since 2011. Although the economy is doing well now, it was doing better when evil FF were in government, and one of the reasons it is doing well now is that claims that it was left in a ‘destroyed’ state by the previous government have turned out to be baloney. Also, population growth was much higher during that ‘shallow’ era, and Ireland had net immigration of half a million between 1997 and 2011, which is certainly better than currrently. Kenny Is simply a fanatical liberal with a loathing contempt for traditional Ireland, which renders him incapable of seeing anything good in what went before him. FG should get rid of him and replace him with someone more in touch with traditional Ireland if they want to turn the present growth into votes.

Ireland really got tangoed by financialisation. The problem with excessive debt whether public or private is that the rules tend to be set by debt holders. And they were. And then some. Getting excited about the latest growth is a bit sad. There is so much work to do to get debt down to safe levels and it is made harder by deflation.


“Although the economy is doing well now, it was doing better when evil FF were in government”


202 bn in debt is the legacy of FF
And as Kevin O’Rourke said in 2010

“People can argue all they want about whether we should increase taxes or not, but in fact we will have to. An ironic legacy of a decade of FF/PD rule.”

Fyi The Aesthetic Turn in Irish Econometrics continues …. A MUST!

10 stunning images show the beauty hidden in pi

Saturday — March 14, 2015, or 3/14/15 — marks an extremely nerdy holiday. It is the official celebration of π, the magical, mathematical and infinite constant that is the ratio of a circle’s circumference to its diameter.

For any circle you can imagine, if you divide the distance around the circle by the distance across it, you will get pi, or 3.1415926535897932384626433832795028841971693993751058209749

We could keep going, but you get the picture.

Some people will celebrate the holiday by making and eating pies (Washington restaurants are offering specials on everything from pizza to banana cream). Others will run a Pi-K race of 3.14 kilometers. And some data tinkerers are making art that visualize pi’s infinite and random digits.

One of the best known of these data tinkerers is Martin Krzywinski, a scientist who specializes in bioinformatics, or using computer science and statistics to understand biological data.

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/03/14/10-stunning-images-show-the-beauty-hidden-in-pi/ [h/t nakedcapitalism.com


Odious financial system debt is a bit like pi – hard to see an end to it!

@William Porterfield et al. & Cricket Ireland

Great show. Well done!


“The foundation’s research shows the rate of suicide among men at the end of 2012 was 57 per cent higher than would have been the case if the recession had not occurred. The equivalent rate for women was 7 per cent higher.
When measured in absolute terms, the foundation estimates these figures equate to 476 more male suicides than would have been expected if previous trends continued.
Similarly, the rate of self harm among men was 37 per cent higher than would have been the case if there was, while the rate among women was 26 per cent higher. “


“With a pre-election budget only a couple of days away, full of terms like deficit and GDP, Manchester University students have provided a useful reminder of how little voters understand of the economic terminology economists, politicians and the media throw around.
According to a poll of more than 1,500 adults, around 60% failed offer the correct definition of GDP when given five choices. A quarter said they did not know.

Zach Ward-Perkins, a researcher on the project, said ignorance among voters and especially lower socio-economic groups, means “democratic debate stagnates into discussions between small elite groups over small differences behind the backs of an increasingly disillusioned and unrepresented public.” He added: “This status quo is a grave threat to our democracy.”
The survey fits with studies by newspapers and political parties that find only a minority of voters grasp the jargon and concepts commonly used in economic discourse and repeated in the media.
Only 30% of respondents were able to correctly define quantitative easing. A further 21% said they had simply never heard of it. Yet, as the students point out “Quantitative easing amounted to the creation of over £375bn and the Bank of England openly admits that it benefitted the top 5% richest households most.””

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