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MONTHLY ECONOMIC BULLETIN 19 December 2018 · PDF file Investment (+43.4 per cent) and imports (+16.4 per cent) also grew significantly due to acquisitions of intellectual property

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  • MONTHLY ECONOMIC BULLETIN 19 December 2018

  • Department of Finance | Monthly Economic Bulletin: December 2018

    | 1

    The Department’s Monthly Economic Bulletin (MEB) provides a monthly update of some of the key developments within the Irish economy across a broad spectrum of sectors. The bulletin also outlines fiscal developments for the State, as well as being a source of the Department’s most up-to-date forecasts and providing a snapshot of conditions in some of Ireland’s key trading partners. The publication is designed with the aim of being both informative and accessible to a wide readership. The MEB can be used as a research aid or for presentational purposes and is also available online at the Department’s website at www.finance.gov.ie

    Table of Contents The Economy ................................................................................................................................................................ 2

    Economic Growth ..................................................................................................................................................... 2

    International Developments ..................................................................................................................................... 2

    External Trade ........................................................................................................................................................... 4

    Personal Consumption ............................................................................................................................................. 5

    Inflation..................................................................................................................................................................... 5

    Labour Market .............................................................................................................................................................. 6

    Employment ............................................................................................................................................................. 6

    Earnings .................................................................................................................................................................... 7

    Sectoral Developments ................................................................................................................................................. 8

    Housing ..................................................................................................................................................................... 8

    Tourism ..................................................................................................................................................................... 8

    Public Finances ............................................................................................................................................................. 9

    Exchequer Balance.................................................................................................................................................... 9

    General Government Balance .................................................................................................................................. 9

    Other News ................................................................................................................................................................... 9

    http://www.finance.gov.ie/

  • Department of Finance | Monthly Economic Bulletin: December 2018

    | 2

    Economic Growth Macroeconomic outturn for 2017

    Real GDP rose by 7.2 per cent in 2017. GNP rose by 4.4 per cent.

     GNI* is estimated at €181.2 billion in 2017 (GDP is €294.1 billion). As a result, the debt to GNI* ratio was 111.1 per cent in 2017 (compared to a debt to GDP ratio of 68.4 per cent in 2017). 1

     Modified Final Domestic Demand made a solid positive contribution to growth in 2017 increasing by 3.2 per cent on an annual basis.2

     Net exports were the main driver of growth in 2017, reflecting a significant increase in exports of 7.8 per cent and a substantial decline in imports of 9.4 per cent over the year. The latter is primarily due to a contraction in imports linked to the onshoring of intellectual property assets.

    Macroeconomic outturn for Q3 2018

     In the third quarter of this year, the level of GDP rose by 0.9 per cent relative to the previous quarter (on a seasonally adjusted basis). As a result, the level of GDP was 4.9 per cent higher year-on-year.

     Personal consumption (+2.9 per cent) and exports (+9.4 per cent) grew strongly on an annual basis. Investment (+43.4 per cent) and imports (+16.4 per cent) also grew significantly due to acquisitions of intellectual property and aircraft.

    (year-on-year %

    changes) 2016 2017 2018

    Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016 2017

    Personal Consumption 2.9 3.1 -0.3 1.0 3.1 2.8 2.6 3.8 2.9 4.0 1.6 Government Consumption

    4.7 3.4 3.3 3.5 4.1 4.9 3.4 5.3 6.1 3.5 3.9

    Gross Investment 58.8 31.6 -22.4 -8.7 -46.0 -43.0 -2.9 -32.2 43.4 51.7 -31.0

    Exports 2.0 2.7 3.0 4.4 8.6 14.5 5.9 12.1 9.4 4.4 7.8 Imports 16.7 7.9 -9.3 -3.1 -14.7 -10.5 -1.5 -5.8 16.4 18.5 -9.4 GDP 1.4 12.7 2.9 6.2 13.2 6.5 9.0 8.7 4.9 5.0 7.2 GNP 8.5 21.1 -1.1 0.0 16.0 3.0 8.8 11.4 3.1 11.5 4.4

    Source CSO

    Latest Economic Forecasts

    The Department of Finance published its most recent macroeconomic forecasts on Oct 9th as part of Budget 2019. These forecasts along with those of other forecasting institutions are outlined in the table to the right.

    GDP Forecasts Date 2018 2019

    European Commission Nov 2018 7.8 4.5

    Department of Finance Oct 2018 7.5 4.2 Central Bank of Ireland Oct 2018 6.7 4.8

    IMF Oct 2018 4.7 4.0 ESRI Oct 2018 8.2 4.2

    OECD Oct 2018 5.9 4.1

    1 An explanatory note on GNI* is available on the Department’s website: GDP and 'Modified GNI' - Explanatory Note 2 Modified domestic demand equals domestic demand excluding certain volatile components of investment spending.

    https://www.finance.gov.ie/wp-content/uploads/2018/05/180504-GDP-and-Modified-GNI-Explanatory-Note-May-2018.pdf

  • Department of Finance | Monthly Economic Bulletin: December 2018

    | 3

    International Developments

    The United States

     The US economy expanded by 0.9% in Q3 2018 q-o-q and increased by 3.5% y-o-y.

     Annual inflation was 2.2% in November, unchanged from October. Core inflation was up 0.2% on the month

    (sa) and up 2.1% y-o-y.

     US non-farm payroll data showed the US economy gaining 155,000 jobs in the month of November (sa), with

    the unemployment rate unchanged at 3.7% in November.

     The manufacturing PMI decreased to 53.9 in December and the services PMI decreased to 53.4 in December

    (above 50 indicates expansion).

    The euro area

     The euro area economy expanded by 0.2% in Q3 2018 q-o-q and increased by 1.6% y-o-y (sa).

     Annual inflation in the euro area decreased from 2.2% in October to 1.9% in November. Core inflation was

    1.1% in November, down from 1.2% in October.

     The unemployment rate in the euro area was 8.1% in October (sa), unchanged from September, and down

    from 8.8% rate recorded in October 2017.

     The manufacturing PMI decreased to 51.4 in December and the services PMI decreased to 51.4 in December

    (above 50 indicates expansion).

    Exchange Rate Developments

     The €/£ spot rate was 0.88 in November, unchanged in October, and down from 0.89 in November 2017. The

    €/$ spot rate was 1.14 in November, down from 1.15 in October, and down from 1.17 in November 2017.

     Brent crude oil was $65.9 in November, down from $80.5 in October and from $62.7 a year earlier.

    .

    The United Kingdom

     The UK economy expanded by 0.4% in the three months to

    October.

     Annual HICP inflation was 2.3% in November 2018, down from

    2.4% October 2018. Core inflation was 1.9% in November,

    unchanged from October.

     Employment increased by 79,000 people in the 3 month period to

    October 2018 compared with May to July 2018 and increased by

    396,000 y-o-y.

     The unemployment rate was 4.1% in the three month period

    August to October, down from 4.3% in the same period last year.

     The manufacturing PMI increased to 53.1 in November but the

    services PMI decreased to 50.4 in November.

  • Department of Finance | Monthly Economic Bulletin: December 2018

    | 4

    External Trade External Trade and Industrial Production

     On a monthly basis, merchandise exports increased by 10.2% (sa) in value terms in October. Merchandise imports falling by 4.5% (sa) in value terms. As a result, the trade surplus increased by 48.0% to €4,841 million compared with September 2018.

     On a monthly basis, industrial output decreased by 0.2% (sa) in October, and increased by 4.9% in annual terms.

     Output in the modern sector increased by 2.6% in October and output in the traditional sector increased by 7.0% in the month.

    PMI Data3

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