Macroeconomic Scoreboard 2017

Source publication: Balance of International Payments, Q2 2018

Get the data: StatBank BPA15 (Current Account), StatBank N1705 (Gross Domestic Product)

The current account balance is mainly driven by exports less imports, although it also includes net income and current transfers in and out of Ireland, as shown in the CSO note on Trends in Net Factor Income. As part of the Macroeconomic Imbalance Procedure (MIP), the current account balance is expressed as a three year average in terms of a percentage of GDP. A positive current account balance usually indicates that exports are greater than imports and vice versa. From 2007 to 2013, Ireland ran a current account deficit (measured as a three year average) and breached the lower MIP threshold from 2007 to 2010. The current account became less negative from 2010-2013. It became positive from 2015 as a result of the relocation of companies to Ireland and their associated contract manufacturing exports. The modest surplus in 2016 was mainly due to increased R&D related IP imports in that year. While the strong surplus resumed in 2017 due to lower R&D related IP imports combined with increased computer service exports.

Supplementary analysis:

Get the data: Eurostat database

The real effective exchange rate (REER) is a country’s exchange rate relative to a basket of exchange rates of other countries weighted according to their respective trade shares. A change in it, therefore, aims to assess a country's price or cost competitiveness relative to its principal competitors in international markets. A positive value indicates real appreciation and a loss of country competitiveness relative to principal trading partners. A negative value indicates improving country competitiveness relative to its principal trading partners. Changes in cost and price competitiveness depend on cost and price trends as well as exchange rate movements. This specific REER for the Macroeconomic Imbalance Procedure is deflated by the consumer price indices relative to a panel of 42 countries. The REER estimates from 2007 to 2009 follow a positive trend which changed from 2010 onwards following the financial crisis (Figure 3.5). From 2010 to 2012 the lower MIP threshold of -5% was breached followed by a recovery period during 2013 and 2014. Since then the indicator has breached its threshold each year.

Supplementary analysis:

Get the data: Eurostat database, World Bank database

The pattern of Ireland’s REER has been similar to other Euro area countries and to the EU-27 average. However, it has been different to those of the United Kingdom and the USA which have other currencies in circulation. It is important to note that data on the USA is calculated in a different way to Eurostat and therefore is not fully comparable. The indicator for the USA is computed using data from the World Bank’s World Development Indicators as a three year percentage change.

Get the data: Eurostat database

Figure 3.7 shows the EU-28 REER values for 2017. Ireland has the second lowest percentage change in REER value with the United Kingdom and Czech Republic experiencing the lowest and highest changes, respectively.

Indicator 4: Export Market Share

Source publication: Balance of International Payments

Get the data: Eurostat database

The export market share is calculated by dividing the exports of the country by the total exports of the world. For a country to increase its export market share its exports must increase at a faster rate than world exports. As a result a country’s exports may increase but its export market share may still fall. To capture the structural losses in competitiveness that can accumulate over longer time periods, this indicator is calculated as the percentage change in values compared to five years previously.

Ireland experienced negative values for this indicator each year from 2007 to 2014, with the exception of 2009, suggesting a decrease in export market shares. In most cases the MIP threshold of -6% was breached. This trend changed in 2015, when the indicator value rose to 40%, and 60% in 2016. The change largely relates to the amount of contract manufacturing carried out on behalf of Irish companies. The rise in contract manufacturing has led to the increase in goods exports from Irish companies and is explained in the Contract Manufacturing Information Notice (PDF 516KB) published by the CSO.

Supplementary analysis:

Get the data: Eurostat database

Ireland’s increase in share of exports was the highest in the EU in 2017, having surpassed Luxembourg by over 30% in 2016.

Get the data: Eurostat database, World Bank database

Ireland and three of its largest EU trading partners have mainly experienced declining export market shares from 2007 to 2014. On the other hand, China has seen substantial increases each year, however these increases are at a declining rate. Ireland, in contrast, has reversed its trend of a decreasing market share seen up to 2014, and exhibited very large increases in its share from 2015 onwards. Note that the country comparison data is sourced from Eurostat, with the exception of the data for China which is from the World Development Indicators compiled by the World Bank.

Indicator 5: Nominal Unit Labour Costs

Source publication: National Income & Expenditure Annual, 2017

Get the data: StatBank N1702 (Employee Compensation/Total Labour Costs), StatBank ESQ05 (Number of Employees), StatBank N1704 (Gross Domestic Product)

The nominal unit labour cost is an index computed using the ratio of labour costs (compensation per employee) to labour productivity (GDP per person employed, including self-employed).

A rise in an economy’s nominal unit labour costs corresponds to an increase in labour costs relative to labour productivity, resulting in lower competitiveness.

During the period 2007-2009, Ireland experienced positive indicator values, which breached the MIP threshold of 9% in 2007 and 2008 (Figure 3.11). This trend was reversed after the financial crisis, leading to increased competitiveness in the Irish economy. The three year change in Ireland’s nominal unit labour cost indicator was -17.2% in 2017. Note that this estimate was substantially affected by the level-shift in GDP in 2015.

Supplementary analysis:

Get the data: Eurostat database (Compensation of Employees), StatBank N1702 (Employee Compensation/Total Labour Costs), StatBank ESQ05 (Number of Employees), StatBank N1704 (Gross Domestic Product)

Breaking nominal unit labour costs into its two components shows the interrelationship between labour costs and productivity. Until 2009, labour costs rose at a faster rate than labour productivity compared to their respective levels three years previously (Figure 3.12). This caused overall increases in nominal unit labour costs. Since 2010 the three year changes in labour costs were continually lower than those in labour productivity. From 2015 onwards, labour productivity increased at a significantly faster rate than labour costs thereby increasing overall economic competitiveness. Labour productivity increases since 2015 were mainly due to the large increase in GDP.

Internal Indicators

Indicator 6: Deflated House Price Index

Source publication: Residential Property Price Index, September 2018

Get the data: StatBank HPA06 (Residential Property Price Index), StatBank N1705 (Consumption at Current Market Prices by Item and Year), StatBank N1706 (Consumption at Constant Market Prices by Item and Year)

The deflated house price index is the ratio between the residential property price index and the national accounts deflator for private final consumption expenditure for households. This year-on-year indicator measures inflation in the housing market relative to inflation in the final consumption expenditure of households. The national accounts deflator for private final consumption expenditure is obtained by dividing final consumption expenditure of households at current market prices (79a) by final consumption expenditure of households at constant market prices (92a). The deflated house price index is then calculated by dividing the house price index by this deflator.

From 2008 to 2013 Ireland experienced a decline in house price index (Figure 3.13) following the financial crisis. Since 2014 Ireland has seen increases in the deflated house price index with this indicator has breached the MIP threshold of 6%. These increases suggest inflation of the Irish housing market relative to the final consumption of households. A decrease in the rate of change in 2015 and 2016 follows the introduction of new lending regulations by the Central Bank. Compared to 2016, the overall increase in the deflated price index increased in 2017 at 9.5%.

Get the data: StatBank HPA06 (Residential Property Price Index), StatBank N1705 (Consumption at Current Market Prices by Item and Year), StatBank N1706 (Consumption at Constant Market Prices by Item and Year)

Figure 3.14 shows a comparison of the year-on-year deflated house price index between Dublin and the rest of the country. From 2007 to 2010, Dublin experienced an increased rate of deflation compared to the average of the remaining counties. Similarly, from 2011 to 2014 the rate of inflation was faster for Dublin than the rest of the country. From 2015 onwards both prices of property within and outside Dublin increased, however, the prices outside Dublin increased at a faster rate than prices in Dublin. 

Indicator 7: Private Sector Credit Flow, consolidated

Source publication: Institutional Sector Accounts Non-Financial and Financial 2017

Get the data: StatBank IFI04

Private sector credit flow represents the net amount of liabilities (loans and debt securities) which non-financial corporations (NFCs, S.11), households (S.14) and non-profit institutions serving households (NPISH, S.15) have incurred during the year. Transactions between units within each sector are eliminated to produce a consolidated presentation. The indicator is expressed as a percentage of GDP.

Figure 3.15 shows the relatively large positive flows of credit in the period 2007-2008, predominantly related to investment in residential and commercial property. Aside from 2011, the indicator has been below the MIP threshold since 2009. The threshold breach in 2011 was caused principally by refinancing operations of large multinational groups during this period. In 2017, private sector credit flows increased by €20.6bn over the 2016 level, standing at -7.5% of GDP – well below the MIP threshold of 14%.

 Supplementary analysis:

Source publication: Institutional Sector Accounts Non-Financial and Financial 2017

Get the data: StatBank IFI05

Private sector debt is the stock of liabilities in the form of loans and debt securities held by non-financial corporations (NFCs, S.11), households (S.14) and non-profit institutions serving households (NPISH, S.15). Positions between units within each sector are eliminated to produce a consolidated presentation. This reflects the amount of funds that the sector receives from other sectors. The indicator is expressed as a percentage of GDP (Figure 3.17). For Ireland, this indicator has exceeded the threshold of 133% every year since 2001 (the first year of availability for this time series) and stood at 244% of GDP at the end of 2017.

Supplementary analysis:

Source publication: Government Finance Statistics, Annual

Get the data: StatBank GFQ13 (Government Debt), StatBank N1724 (GDP)

General government gross debt (GG Debt) comprises of liabilities in the financial instruments currency and deposits (AF.2), debt securities (AF.3) and loans (AF.4). The scoreboard indicator is obtained by expressing GG Debt as a percentage of GDP.

GG Debt as a percentage of GDP grew steadily from 2007 to its peak in 2012 of 119.9% and breached the MIP threshold of 60% for the first time in 2009. GG Debt as a percentage of GDP has been decreasing since, with significant reductions seen in 2014 and 2015, due to the repayment of IMF loans in 2014 and a substantial increase in GDP in 2015. It has levelled out in 2016 and 2017, with a small decrease in debt as a percentage of GDP seen in 2017, from 73.4% to 68.4%. The level of GG Debt since 2008 has been strongly influenced by the financial crisis, the most significant factor being the state interventions in the banking sector from 2009 onwards. For more see file: 'Impact of Government support for financial Institutions, October 2018'  (Source: CSO, Excel file 15.8KB).

Supplementary analysis:

Figure 3.21 shows gross general government debt both as a percentage of GDP, and as a percentage of GNI* (modified GNI excluding globalisation effects). A similar trend is seen in both series up to 2015, with movements of greater scale in the GG Debt as a percentage of GNI* series. From 2015, the level shift in GDP results in a greater difference between the two series than was previously seen.

The differential between government debt as a percentage of GDP and that as a percentage of GNI* is small before the financial crisis, with a difference between the two values of 4% in 2006 and 2007. This gap widens proportionally as government debt increases up to 2012 and reduces proportionally between 2012 and 2014 as government debt decreases. In 2015 there is a significant change in the differential, which is a result of the substantial jump in GDP of approximately 35%. The difference between government debt as a percentage of GDP and government debt as a percentage of GNI* stood at 48% in 2015. The value of government debt decreased by less than 1% in 2015, while GDP and GNI* increased by 35% and 9% respectively. Again, in 2016 and 2017, the reduction in government debt as a percentage of GDP/GNI* is a result of increases in the values of GDP and GNI*, with values of government debt changing by less than 0.5% in both years. For further information on GNI* and its calculation see the National Income and Expenditure Annual Results 2017.

Source publication: Government Finance Statistics, Annual

Get the data: StatBank GFQ13 (Government Debt), StatBank N1724 (GDP)

Figure 3.22 shows a breakdown of general government debt into its constituent debt instruments. The largest amount of growth in debt securities occurred in 2009 to fund government spending. The significant increase in loan liabilities during the years 2010-2013 is predominantly a result of the EU-IMF programme of financial support. Deposits saw the largest amount of growth in 2011. This is mainly due to a combination of the reclassification of Irish Bank Resolution Corporation (IBRC) into the government sector from mid-2011 and the growing participation of the household sector in state savings schemes since 2008. The decline in the size of the currency and deposits sector once again in the period from 2013 to 2015 is related to the liquidation of IBRC. In 2016 and 2017, all debt instruments experienced a decrease as a percentage of GDP which was consistent with the reduction in general government debt.

Source Publication: National Income and Expenditure Annual Results 2017

Get the data: StatBank N1724 (GDP), StatBank GFQ13 (Government Debt), Eurostat database 

Ireland’s general government gross debt as a percentage of GDP (68.4%) was the 14th highest in the EU in 2017. Ireland's GG Debt as a percentage of GNI* (modified GNI excluding globalisation effects) was 111.1%. If GNI* for Ireland is comparable to GDP for other countries which are less significantly affected by globalisation, then Ireland had the fourth highest level of government debt as a ratio of economic activity in the EU in 2017. For further information on GNI* and its calculation see the National Income and Expenditure Annual Results 2017.

Indicator 10: Unemployment Rate

Source publication: Labour Force Survey 

Get the data: StatBank QLF01

Unemployment rate is the percentage of people in the labour force who are unemployed. The indicator is derived as a three-year average based on the reference year plus the previous two years.

This indicator has exceeded the indicative threshold since 2010 (Figure 3.24). The average rate of unemployment has exhibited a downward trend since 2013 and is below the threshold in 2017 for the first time since 2009.

Supplementary analysis:

Get the data: StatBank QLF04

From 2007 to 2011, the unemployment rate increased both for those aged 15-24 and those aged over 25 (Figure 3.25). In 2017, unemployment rate has decreased for both age groups, as it has done since 2013.

Source publication: Institutional Sector Accounts Non-Financial and Financial 2017

Get the data: StatBank IFI03

This indicator measures the year-on-year change in the sum of all liabilities of the financial sector. The value for this indicator reduced between the years 2007 and 2009, as a result of deleveraging in the banking sector. This indicator only breached the MIP threshold of 16.5% in the year 2014 (Figure 3.27). The sharp increase in financial sector liabilities in 2014 was driven mainly by growth in the investment funds sector (S.124).

It should be noted that the generally positive year-on-year growth in total financial sector liabilities over the period 2007-2017 has been heavily influenced by the expansion of the investment funds sector in Ireland. While there was a contraction in this indicator in the period 2011 to 2012, the investment funds sector has expanded every year since 2008, as can be seen in Figure 3.28. For more information on the financial sector see The Financial Sector in Ireland's National Accounts 2016 - Thematic Research Publication.

Supplementary analysis: 

Source publication: Labour Force Survey, Q2 2018

Get the Data: StatBank QLF28 (ILO Participation Rates), Eurostat database

Activity rate is the percentage of the population aged 15-64 years in the labour force as a proportion of the total population of the same age. This particular indicator is measured as a three-year percentage change. This indicator breached its threshold of -0.2% in the years 2009-2012. Since 2013, the activity rate has become positive, with a value of 0.9% in 2017.

Get the data: Eurostat database

Ireland’s activity rate grew as a three-year percentage change from 2007 to 2008, as it did for many comparable European countries. However, between 2009 to 2012 it declined sharply, whereas many other countries still saw increases in activity rate or much smaller decreases.

Get the data: Eurostat database

Compared to three of the country’s largest European trading partners (Germany, the Netherlands, and the United Kingdom), Ireland has consistently had a relatively low activity rate.

Indicator 13: Change in the Long-term Unemployment Rate

Source publication: Labour Force Survey, Q2 2018 

Get the data: StatBank QLF04 (Duration of Unemployment), Eurostat database

The long-term unemployment rate expresses the number of people aged 15 to 74 unemployed for over one year as a percentage of the active population of the same age. The MIP threshold is 0.5%. After small changes in the long-term unemployment rate (measured as a three-year percentage change) in 2007 and 2008, Ireland’s long-term unemployment rate increased from 2009 to 2013 at rates far above the 0.5% threshold. However, since 2014, long-term unemployment as a three-year percentage change has continued to decline.

Supplementary analysis:

Source publication: Labour Force Survey Q2 2018

Get the data: StatBank QLF04 (Duration of Unemployment), Eurostat database

In 2017 Ireland had the 13th lowest long-term unemployment rate in the EU (Figure 3.35).

Source publication: Labour Force Survey, Q2 2018

Get the data: StatBank QLF04 (Duration of Unemployment), Eurostat database

Since 2010 Ireland’s long-term unemployment rate has been higher than three of its major trading partners (Germany, the Netherlands, and the United Kingdom) but this gap has narrowed in recent years.

Indicator 14: Change in Youth Unemployment

Source publication: Labour Force Survey, Q2 2018

Get the data: StatBank QLF18 (ILO Participation, Employment and Unemployment Characteristics by Age Group)

The MIP threshold is a 2% change over three years. Ireland’s youth unemployment increased at a rate exceeding this threshold from 2008 to 2012, peaking with an 18.9% increase in 2010. Substantial reduction in youth unemployment can be seen from 2014 onwards.

Supplementary analysis:

Get the data: StatBank QLF18

Classifying the change in youth unemployment by age, it can be seen that most of the change in youth unemployment is mainly driven by those aged from 20 to 24.

Get the data: Eurostat database

Ireland’s youth unemployment rate (3-year change in percentage of active population aged 15-24) compared to its EU neighbours in 2017 is shown in Figure 3.39. Ireland had the 13th lowest youth unemployment rate in 2017.

Get the data: Eurostat database

Figure 3.40 shows the youth unemployment rate as levels rather than changes in percentage points each year since 2007. Compared to the Netherlands and Germany, Ireland’s youth unemployment rate has been relatively high since 2009.