Irish economy grows 5.2% in 2016
Ireland’s economy grew 5.2% last year, exceeding all other euro zone countries and most official forecasts for the third successive year. The latest quarterly national accounts from the Central Statistics Office (CSO) also suggest output increased in all sectors of the economy.
The figures show gross domestic product (GDP) accelerated 5.2% in 2016, while gross national product (GNP) rose 9%. The bigger GNP number reflects the profits associated with redomiciled plcs, which have relocated their headquarters here for tax purposes. On a quarterly basis, GDP advanced 2.4% in the final quarter of 2016, down from the 4% recorded for the three months to September.
Investment jumped 45.5% to €76 billion, driven by the import of intellectual property assets to Ireland. Personal consumption, which accounts for almost half of domestic demand and ranks as the best indicator of local economic activity, rose 3%. This tallies with the rise in employment and tax revenue evidenced in other indicators.
Minister for Finance Michael Noonan welcomed the latest figures and said the Government was committed to remaining vigilant in the face of an increasingly uncertain external environment.
“Domestic demand is now the main driver of growth, with private consumption up 3%% in 2016 supported by favourable labour market dynamics, continued increases in disposable income and solid consumer confidence.” While his department expects growth to stay above 3% over the next three years, it has estimated that a “hard Brexit” – involving Britain exiting the EU’s single market entirely – could knock about 3.5% off GDP over the next decade.
Merrion analyst Alan McQuaid said the latest figures show personal spending and construction were holding up well, but he warned of a possible Brexit-related slowdown in headline growth. “We expect that ‘Brexit’ worries will intensify in 2017, leading to lower overall GDP growth this year.”
