Lucky that An Taoiseach Enda Kenny is today wrapping up his St Patrick’s Day tour of the US, he’s been telling folks for the past week that Ireland is on the road to recovery and has seen positive GDP growth in each of the past two years. Figures released this morning from Ireland’s Central Statistics Office paint a different picture with confirmation that the economy contracted in both Quarter 3 2012 and Q4 2012 and that we are therefore back in recession. The Q4,2012 contraction was 0.047% on Q3,2012 which is shown as a round 0.0% but it is still a negative and “recession” is technically defined as two quarters of negative GDP growth.
Don’t be too dismayed though. There is some good news in the figures. We have met the Department of Finance forecast for real GDP growth of 0.9% in 2012. Although IBEC and the ESRI were predicting 1.2% and 1.3%, most credible commentators were predicting less than 0.9%, so coming in on Government targets is encouraging, both for the figure itself and also giving us some confidence that the Department of Finance is capable of producing forecasts that match reality.
Nominal GDP is €163,595m for 2012 which is even better than the Department of Finance forecast of €163,150m. Nominal GDP is used when calculating our deficit % under the Maastricht Treaty and the estimate on here is that we will now be at about 7.7% which is a shade less than the current Spanish forecast of Spain’s deficit at 8%. We’re no longer the worst in the EuroZone, and we’re beating Troika targets. Yay!
And what about GNP? In Ireland because of the significant presence of international companies which remit dividends and other monies overseas, we tend to rely on GNP as a measure of national income but even GNP can be distorted by multinationals. But real GNP also rose in 2012 by 3.4%. Nominal GNP was €133,403m up 5% from 2011.
So although we are back in recession, we’re growing annually and we’re hitting and exceeding Government and Troika targets. So, not all bad, but I bet An Taoiseach is relieved he hasn’t had to disclose in front of the Yanks that Ireland is back in recession under his leadership.