Macroeconomic Scoreboard 2018

Source publication: International Accounts Q2 2019

Get the data: StatBank BPA15 (Current Account), StatBank N1805 (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 percentage of GDP and presented as a three year average. A positive current account balance usually indicates that exports are greater than imports and vice versa. From 2009 to 2014, Ireland ran a current account deficit (measured as a three year average) and breached the lower MIP threshold in 2009 and 2010. The value of this indicator increased year on year from 2010-2015. A surplus was recorded in 2015 as a result of the relocation of companies to Ireland and their associated contract manufacturing exports. The modest surpluses in 2016 and 2017 were mainly due to increased R&D related IP imports in those years. While a strong surplus resumed in 2018 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 three year percentage change in the REER estimate for 2009, at 5.2%, breached the upper MIP threshold. 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 breached the lower threshold each year until 2018. The three year percentage change in REER for 2018, at 2.3%, neither breached the upper nor the lower threshold.

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-28 average. However, it has been different to those of the United Kingdom and the USA where other currencies are 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 2.7 shows the EU-28 three year percentage changes in REER values for 2018. Ireland has the 8th lowest percentage change in REER value, with the United Kingdom and Czechia experiencing the lowest and highest changes, respectively.

Indicator 4: Export Market Share

Source publication: International Accounts Q2 2019

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 a negative export market share (taken as a five year percentage change), and breached the MIP threshold, each year from 2010 to 2014. This equates to a decrease in Ireland's export market share relative to total world exports. This trend changed in 2015, when the indicator value rose to 37.8%. 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. The export market share indicator continued to rise between 2015 and 2018, and stood at 77.4% in 2018.

Supplementary analysis:

Get the data: Eurostat database

Ireland had the highest increase in export market share in the EU in 2018, at 77.4%. As this indicator is calculated as a five year percentage change, this figure continues to reflect the large year on year increase of 40.6% seen in 2015.

Get the data: Eurostat database, World Bank database

Figure 2.10 shows Ireland’s change in export market share relative to three of its largest EU trading partners and China. From 2010-2014 Ireland and the other EU countries show an export market share below the MIP threshold. Conversely, China’s change in export market share is relatively high from 2009-2015, declining significantly after 2015 to stand at 5.6% in 2018. 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 Cost

Source publication: National Income & Expenditure Annual, 2018

Get the data: StatBank N1802 (Employee Compensation/Total Labour Costs), StatBank QLF17 (Number of Employees), StatBank N1804 (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 cost corresponds to an increase in labour costs relative to labour productivity, resulting in lower competitiveness. The Macroeconomic Scoreboard indicator is presented as a three year percentage change.

In 2009, Ireland’s three year percentage change in nominal unit labour costs stood at 8.7%, just below the MIP threshold of 9%. However in 2010, due to the impact of the financial crisis, nominal unit labour costs decreased, leading to increased competitiveness in the Irish economy. In 2018, the three year change in Ireland’s nominal unit labour cost indicator was -2.8%. Note that values of this indicator in 2015-2017 were substantially affected by the level-shift in GDP in 2015.

Supplementary analysis:

Get the data: Eurostat (Compensation of Employees), StatBank N1802 (Employee Compensation/Total Labour Costs), StatBank ESQ05 (Number of Employees), StatBank N1804 (Gross Domestic Product)

Breaking nominal unit labour cost into its two components shows the interrelationship between labour costs and productivity. In 2009, labour costs rose at a faster rate than labour productivity compared to their respective levels three years previously (Figure 2.12). 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 in 2015.

Internal Indicators

Indicator 6: Deflated House Price Index

Source publication: Residential Property Price Index, August 2019

Get the data: StatBank HPA06 (Residential Property Price Index), StatBank N1805 (Consumption at Current Market Prices by Item and Year), StatBank N1806 (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 percentage change 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 2009 to 2013, Ireland experienced decreases in the deflated house price index (Figure 2.13), following the financial crisis. Since 2014, Ireland has seen increases in the deflated house price index and has consistently breached the MIP threshold of 6%. These increases suggest inflation of the Irish housing market relative to the final consumption of households. In 2018, the annual percentage change in the deflated price index was 8.3%, down 1.5% from the 2017 value of 9.8%.

Get the data: StatBank HPA06 (Residential Property Price Index), StatBank N1805 (Consumption at Current Market Prices by Item and Year), StatBank N1806 (Consumption at Constant Market Prices by Item and Year)

Figure 2.14 shows a comparison of the year-on-year deflated house price index between Dublin and the rest of the country. In 2009 and 2010, Dublin experienced a greater rate of house price index deflation compared to the rest of the country. Similarly, as house prices began to recover from the great recession, in 2013 and 2014 the rate of house price index 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

Source publication: Institutional Sector Accounts Non-Financial and Financial 2018

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 2.15 shows that, 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 2018, private sector credit flows decreased by €25.6bn over the 2017 level, standing at -7.8% of GDP – well below the MIP threshold of 14%.

Supplementary analysis:

Source publication: Institutional Sector Accounts Non-Financial and Financial 2018

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 2.17). 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 223.2% of GDP at the end of 2018.

Supplementary analysis:

Source publication: Government Finance Statistics Annual, October 2019

Get the data: StatBank GFQ13 (Government Debt), StatBank N1824 (GDP)

General government gross debt (GG debt) consists of liabilities in the financial instruments of 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 2009 to its peak in 2012/2013 of 119.9% and breached the MIP threshold of 60% in each of the past 10 years. GG Debt as a percentage of GDP has been decreasing since 2013, 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. The rate of decrease seen between 2015 and 2018 has been more gradual. In 2018, GG debt as a percentage of GDP decreased by 3.2%, from 67.8% to 63.6%.

 The level of GG Debt since 2009 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: Ireland - Impact of Government Support for Financial Institutions October 2019 (XLS 18KB)   (Source: CSO, Excel file 18KB).

Supplementary analysis:

Figure 2.21 shows GG debt both as a percentage of GDP, and as a percentage of GNI* (modified GNI excluding globalisation effects). The differential between government debt as a percentage of GDP and that as a percentage of GNI* 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 47% 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, between 2015 and 2018, 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 decreasing by less than 0.5% in 2016 and increasing in both 2017 and 2018. For further information on GNI* and its calculation see the National Income and Expenditure Annual Results 2018.

Source publication: Government Finance Statistics Annual, October 2019

Get the data: StatBank GFQ13 (Government Debt), StatBank N1824 (GDP)

Figure 2.22 shows a breakdown of general government debt, as a percentage of GDP, into its constituent debt instruments. 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 2009. 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. Between 2015 and 2018, 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 2018

Get the data: StatBank N1824 (GDP), StatBank GFQ13 (Government Debt), Eurostat database 

Ireland’s general government gross debt as a percentage of GDP (63.6%) was the 13th highest in the EU in 2018. Ireland's GG Debt as a percentage of GNI* (modified GNI excluding globalisation effects) was 104.3%. 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 2018. For further information on GNI* and its calculation see the National Income and Expenditure Annual Results 2018.

Indicator 10: Unemployment Rate

Source publication: Labour Force Survey Q2 2019 

Get the data: StatBank QLF01

The 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 exceeded the MIP threshold from 2010 to 2016 (Figure 2.24). Unemployment has exhibited a downward trend since 2013 and is below the threshold in both 2017 and 2018, for the first time since 2009.

Supplementary analysis:

Get the data: StatBank QLF04

Figure 2.25 shows a breakdown of the unemployment rate by age group, illustrating the share of the unemployment rate composed of those younger than 25 years of age and those 25 years and over. From 2009 to 2011, unemployment increased both for those aged 15-24 and those aged over 25 (Figure 2.25). In 2018, unemployment has decreased for both age groups, as it has done since 2013. For further information on the unemployment rates for different age groups, please see the Labour Force Survey results, and the associated StatBank tables. Further information on youth unemployment can also be found in Indicator 14 below.

Source publication: Institutional Sector Accounts Non-Financial and Financial 2018

Get the data: StatBank IFI03

This indicator measures the year-on-year change in the sum of all liabilities of the financial sector. This indicator only breached the MIP threshold of 16.5% in the year 2014 (Figure 2.27). 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 2009-2018 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 2.28. For more information on the financial sector see The Financial Sector in Ireland's National Accounts 2016.

Supplementary analysis: 

Get the Data: Eurostat database

The activity rate (also known as the participation 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 point change. This indicator breached its threshold of -0.2% in the years 2009-2012. Since 2013, the three year percentage point change in the activity rate has become positive, with a value of 0.8% in 2018.

Get the data: Eurostat database

Figure 2.30 shows the change in Ireland’s activity rate compared with selected EU countries. From 2009 to 2012, the change in Ireland’s activity rate breached the MIP threshold. The Netherlands follows a similar trend to that of Ireland, but with changes of lesser magnitude. While Germany did not breach the MIP threshold at any time during the ten year period, our three other European counterparts all breached the threshold at some point between 2010 and 2013.

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: Long-term Unemployment Rate

Source publication: Labour Force Survey Q2 2019

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 for the three year change in percentage points of the long-term unemployment rate is 0.5%. After small changes in the long-term unemployment rate (measured as a three-year percentage point 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 point change has shown a decrease every year.

Supplementary analysis:

Source publication: Labour Force Survey Q2 2019

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

In 2018, Ireland had the 13th highest long-term unemployment rate in the EU (Figure 2.35).

Source publication: Labour Force Survey Q2 2019

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: Youth Unemployment

Source publication: Labour Force Survey Q2 2019

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

The youth unemployment rate is the unemployment rate of people aged 15-24 as a percentage of the labour force of the same age. This indicator is expressed as a three year change in percentage points. The MIP threshold for youth unemployment is a 2 percentage point increase over three years. Ireland’s youth unemployment increased at a rate exceeding this threshold between 2009 and 2012, peaking with an 19% increase in 2010. Substantial reduction in youth unemployment can be seen from 2013 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

Figure 2.39 shows Ireland’s youth unemployment rate compared to its EU neighbours for 2018. Ireland's youth unemployment rate sits mid-table, 14th highest, in 2018.

Get the data: Eurostat database

Figure 2.40 shows the youth unemployment rate as a percentage of the labour force (also known as active population) for the period 2009-2018. Compared to the Netherlands and Germany, Ireland’s youth unemployment rate has been relatively high since 2009, but remains significantly lower than Spain and Greece.