| Source: CSO |
The CSO said today that Gross Domestic Product (GDP) at constant prices was 6 per cent higher in 2006 compared with 2005. The growth in Gross National Product (GNP) for the same period was 7.4 per cent. In the fourth quarter of 2006 the growth in GDP was 5 per cent at constant prices compared with the same period in 2005 while the corresponding growth in GNP was 7.5 per cent
The profits of foreign owned enterprises are excluded from GNP. GNP is also affected by other income flows between residents and non-residents and the timing of these flows can be variable on a quarterly basis.
The national accounts signal a slowing of housing activity in the final quarter of last year. The numbers also indicate that Ireland's export boom is over, with the volume of goods exported down by 2.4 percent by the end of the year. However, exports of services, mainly related to Dublin's International Financial Services Centre - IFSC - rose 12.8 percent for the year as a whole.
Some of the main features of the results are:
Consumer spending (personal consumption of goods and services) in volume terms in 2006 was 6.2 per cent higher compared with theprevious year.
Capital investment, at constant prices, was 3.9 per cent higher in 2006 than in 2005.
Net Exports (exports minus imports) in constant prices were €569 million higher in 2006 compared with 2005.
The volume of output of Industry increased by 6.1 per cent in 2006 compared with the previous year. Output of Distribution, Transport and Communications was up 5.4 % while Output of Other Services was 6.2% higher in 2006 compared with 2005.
Seasonally adjusted series
Seasonally adjusted series are presented in tables 4, 5 and 6. On a seasonally adjusted basis GDP remained the same in volume terms in the final quarter of 2006 compared with the previous quarter while GNP increased by 2.9 per cent in the same period.
Strong GDP growth distracts from weak export performance
Irish employers' group IBEC, have pointed to a slowdown in the housing sector, which intensifies the need to sell more of our goods and services abroad, if living standards are to be maintained.
IBEC said strong 6.2% growth in consumer spending underpinned growth. There was a sharp slowdown in house building towards the end of the year; while housing output is estimated to have increased by 2.9% in the year, there was a fall of 1.7% in the final quarter.
"However, these figures contain no comfort," said IBEC Chief Economist David Croughan. "Visible exports recorded a volume growth of just 0.5%, with a particularly poor performance in the final quarter of the year, with exports falling by an annual 2.4%.
"Strong service export growth of 12.8% helped to offset this dismal performance and total exports of goods and services increased by 4.9%.
However, in value terms, net exports of goods and services (exports less imports) fell by 2.6% in the year.
"This is a measure of the loss of competitiveness, which has resulted in unbalanced growth in recent years. This cannot be sustained in the medium term," Croughan concluded.
Cowen welcomes data
The Minister for Finance, Brian Cowen, TD, welcomed today’s data saying that: “these are very strong figures and confirm that the economy performed very well in 2006. Economic activity last year was particularly buoyant. The figures are in excess of what most commentators had been assuming. There was an improvement in our export performance last year mainly due to higher services exports. In terms of this year, my Department is forecasting a continuation of strong economic growth, with GDP and GNP both expected to rise by 5.3 per cent”.
“Despite the size, strength and length of our economic success, we must not take that success for granted. We live in an increasingly competitive global environment in which we have to trade if we are to prosper. We must ensure that we maintain and build on our competitiveness and government policies can best contribute to that objective by keeping our taxes low, by keeping our costs in check and by building a better public infrastructure. We can only deliver on these objectives by maintaining a sensible, responsible and prudent budget policy which only commits the government to spending and tax levels which are affordable today, tomorrow and in the long-term. Budget responsibility is the best guarantee of our future prosperity”.
“These risks highlight the need to remain competitive as well as the need for prudent management of the public finances in order to provide room for manoeuvre in the event of difficulties arising. That is why the National Development Plan will have first call on resources and will be implemented in full, on time and on budget if we are re-elected to office. All our plans for the future are dependent on maintaining a strong economy. Without economic growth, we will not have the resources to reform our taxes, to fund improvements to our public services. That is why we must work to ensure that our economy remains strong and that is why we must follow policies aimed at the decades ahead.”