The Irish Economy

The CSO have published their first estimate of the Q2 2012 National Accounts.  In line with the inherent volatility in the quarterly national accounts the overall directions from Q1 have been changed.  Seasonally adjusted real GDP was flat in the quarter after a fall of 0.7% in Q1.  The equivalent numbers for GNP are a quarterly rise 4.3% after a fall of 0.1% in Q1.

The Q1 2012 figures were also revised.  The 1.1% quarterly drop in real GDP has been revised to a drop of 0.7%, and the 1.3% drop in GNP initially reported for Q1 has been revised to a fall of just 0.1%.

The quarterly rise in GNP is largely the result of a drop in the net outflow of Net Factor Income rather than any improvement in the domestic economy.  The Balance of Payments release covers this in more detail which shows a €3.2 billion current account surplus for the quarter.

All of Consumption (-0.4%), Investment (-29.4%) and Government (-3.9%) fell in real terms in the quarter.  The large drop in Investment comes after a equally large increase in Q1.  All three are also below their 2011 levels.

Quarterly GDP rose because of an improvement in the balance of trade.  In real term quarterly seasonally adjusted exports fell 0.5%  but imports fell 5.2%.

In annual terms GDP in Q2 2012 was 1.1% lower than in the same period last year.  Constant price GDP for the first half of 2012 is just 0.3% higher than for the first half of 2011.

In nominal terms both GDP (0.5%) and GNP (4.3%) rose in the quarter.  Nominal GDP for the first half of 2012 is estimated to be €81.3 billion; for the equivalent period in 2011 it was €79.1 billion.

Vincent O’Sullivan and I spend some time thinking about the proposed new supervisory authority for the EU run from the ECB in this Vox article, and get worried about the uncertainty the proposal generates. It complements our Harvard Business Review piece earlier in the week.

The question for our blog’s readers is: would a pan European regulator have stopped (or substantially reduced) Ireland’s buildup of private debt during the boom? Obviously gaining an Eurozone-wide perspective is a good thing but detail may be lost in the process.

Meant to post this earlier. The CSO released its figures for August on the 13th of this month, inflation as measured by the HICP is rising at 2.6% year on year. The live register and the related unemployment picture released on the 5th is, frankly, horrendous. I haven’t seen a discussion of these figures on Irish Economy. Constantin has a nice post showing inflation stats in an historical perspective.

This chart is still shocking, despite there being essentially no new information within it.

Policy failures often lead to regulatory reform. In a pathbreaking new study the National Economic and Social Council have published their evaluation of the regulatory regime over residential care homes for the elderly in Ireland, examining closely the regime put in place following the Leas Cross scandal of 2005. Serious failings both of provision and oversight at Leas Cross, uncovered in a RTE Prime Time investigation, led to considerable soul searching about the care of the elderly, and the establishment of a new independent regulator, the Health Information and Quality Authority.

The report makes for very interesting reading. Substantively it finds evidence of demanding standards being effectively applied both by providers across public, private and voluntary sectors, and by the regulator. It provides pointers as to how the regime might be further enhanced, but notes that confidence in the sector has already been significantly enhanced.  Of greater general signficance is an approach to the research which asks to what extent there is evidence of a search for continous improvement both in provision and regulation of services. Within this analysis regulation is no longer a zero sum game of government imposing costs on businesses. Rather it is a shared process of learning about what can and should be done.

The report is one of a number of reports which NESC is publishing on the regulation of human services in Ireland. Taken together they are likely to offer a sea change in the evaulation of regulatory governance, creating expectations that regulators should be responsive and smart and above all capable both of learning and supporting the learning of regulatees. The approach, developed from cutting edge regulatory research internationally, could usefully be applied across both economic and social regulation as starting point for effectively evaluating regulatory performance.

A draft was leaked a few weeks ago but here is the Commission’s Summer 2012 Review of the Economic Adjustment Programme for Ireland which was officially published this morning.