This release has been compiled during the COVID-19 crisis. The results contained in this release reflect some of the economic impacts of the COVID-19 situation. For further information see our Information Note.
The economy as a whole grew in the third quarter of 2022, driven mainly by foreign-owned non-financial corporations' higher gross value added. GDP was €134bn, €19bn (17%) higher than 2021-Q3. After outflows to foreign investors, Gross National Income (GNI, B.5g) was €96bn, up €7bn (8%). More information is contained in the Quarterly National Accounts.
The consumption of goods and services by households and government (P.3) was €43bn, an increase of €3bn (7%) compared to the second quarter of 2021 when COVID-19 restrictions were in place. Capital investment (P.5) was €56bn, €31bn higher than the equivalent period last year, driven, as we saw, by investment in Intellectual Property (IP) assets. After all transactions are included, Ireland was a net borrower (B.9) of €11bn in the quarter, whereas it was a net lender of €22bn in the third quarter of last year, a change of €33bn. The large investment in IP was the main cause of the change.
The major change in Ireland's transactions with the rest of the world in Q3-2022 has been explained above: large imports of IP drove down Ireland's balance of payments. These imports are seen in the services imports (P.72) which were €36bn greater than the equvialent quarter last year. This IP is used in production by internationally trading enterprises, and the large assets that have been brought on shore here in recent years have helped to drive up net exports overall. So in this quarter, Ireland's gross exports (that is, before deduction for imports) were €33bn greater than the third quarter of 2021. There were also €12bn extra goods imports this quarter. So overall, the balance of goods and services was down €15bn year-on-year: in 2021-Q3 the rest of the world imported €50bn more from Ireland than it exported to us; in 2022-Q3 other countries imported €35bn more than they exported to this country.
Because most of these net exports were by foreign-owned corporations, the extra profit they generated from their trade in goods and services flowed out to their owners abroad. Net outflows of investment income (D.4) were €39bn, €12bn greater than the equivalent quarter in 2021. With other changes in current transactions, this left the current external balance (B.12, the negative of the current account balance) nearly €5bn for the rest of the world, a change of €27bn from -€23bn in the third quarter of 2021. A significant increase in imports of non-produced assets (such as goodwill and trademarks) left the rest of the world a net lender to Ireland (B.9) of €11bn.
Further details on transactions with the rest of the world are provided by institutional sector in the International Accounts, which include the financial account as well.
The current account (CA) balance shows a country's transactions with the rest of the world. It is a key economic indicator. It is given in the International Accounts and in these Sector Accounts. Here, it is shown as the rest of the world's balance with Ireland (B.12), so a negative B.12 for the rest of the world is a positive current account balance for this country. In the case of Ireland's economy, the two biggest components are net exports (P.6-P.7) and net investment income (D.4). A positive CA balance means that Ireland (including, of course, the foreign-owned corporations operating here) exports more than it imports and/or receives more return on investment abroad than it pays out on foreign-owned assets here. In general, a CA balance that is greater than zero is welcome, as it generates a surplus to invest in the rest of the world.
The current account balance can be seen as what is left of gross saving (B.8g) after the country has invested in fixed capital (P.5), hence the equation:
Gross Saving - Investment = Current Account Balance.
Gross Saving minus Investment can be estimated for each sector, indicating the contribution of corporations, government and household to the change in our account with the rest of the world. Since each sector has transactions with other sectors here in Ireland, as well as with the rest of the world, the Saving less Investment for each sector is not equal to that sector's transactions with the rest of the world. However, for the economy as a whole, the equation gives a good indicator of how the CA balance is being generated.
Ireland has a negaive current account (CA) balance in the quarter (this is the equal and opposite of B.12 of S.2). The contributions of each sector can be seen in Figure 3.1 (see blue box for explanation). This is the first quarter since the beginning of 2020 that the balance has been negative for Ireland. This is explained by the large investment in IP by non-financial corporations in the period. Households continued their high level of saving, while their investment in capital assets such as new homes has not kept pace with this growth. Government saving was also greater than its capital investment in the quarter. Hence, the negative current account balance was driven largely by foreign-owned multinational corporations bringing assets for production into Ireland.
| S11 | S12 | S13 | S1M | CA Balance | |
| 2019Q1 | 8.7960758687 | 0.9286708315 | -1.813606182 | 1.7277591893 | 9.9236121791 |
| 2019Q2 | -36.54006686 | -0.938871234 | 1.0461797825 | 2.9851767279 | -33.49071568 |
| 2019Q3 | 10.792825954 | 1.4122235084 | -1.180744594 | 2.0308147813 | 11.682971905 |
| 2019Q4 | -62.19230611 | 0.2632972946 | 3.9779429576 | -0.062997424 | -58.74102782 |
| 2020Q1 | -49.7070172 | 0.9229687476 | -3.621641208 | 5.9863550138 | -47.49619 |
| 2020Q2 | 4.2375761635 | 0.2345309395 | -6.492452754 | 11.074522665 | 11.23917 |
| 2020Q3 | 10.726088504 | 0.5926818373 | -6.4746485 | 5.699139537 | 9.98659 |
| 2020Q4 | -2.852454722 | -0.363415219 | -1.668710421 | 3.8457589647 | 0.75965 |
| 2021Q1 | 12.574308082 | 1.2813328499 | -5.970768796 | 9.4388444687 | 17.05388 |
| 2021Q2 | 8.6688468642 | -0.689227608 | -1.986964463 | 7.5141908175 | 16.35933 |
| 2021Q3 | 19.860117512 | 0.8082093422 | -2.560887791 | 6.3453691553 | 22.66628 |
| 2021Q4 | -1.692822334 | 0.7576375838 | 4.3693349236 | 2.0213349264 | 4.58001 |
| 2022Q1 | 6.4444551262 | 1.4713894958 | -0.091957013 | 5.3682807731 | 17.04292 |
| 2022Q2 | 5.710067063 | -1.615354642 | 1.794807583 | 6.2998171146 | 15.84803 |
| 2022Q3 | -9.335331823 | -0.46433288 | 2.5083245005 | 4.9238104439 | -4.48046 |
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