Macroeconomic Scoreboard 2019

Source publication: International Accounts Q2 2020

Get the data: StatBank BPA15 (Current Account), StatBank N1905 (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 2010 to 2014, Ireland ran a current account deficit (measured as a three-year average) and breached the lower MIP threshold in 2010. The value of this indicator increased year on year from 2010-2015. A current account surplus was recorded in 2015 as a result of the relocation of companies to Ireland and their associated contract manufacturing exports. The modest but increasing current account surpluses from 2016 to 2018 were followed by a current account deficit in 2019. This current account deficit, at -1.6% (measured as a three-year average), was the first in 5 years and was mainly due to increased R&D related IP imports.

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 indicator is expressed as a three-year percentage change, deflated by the consumer price indices relative to a panel of 42 countries. From 2010 to 2012, the lower MIP threshold of -5% was breached, followed by a recovery period during 2013 and 2014. The indicator again breached the lower threshold each year from 2015 to 2017. The three-year percentage change in REER in 2018 and 2019, at 2.3% and -1.4% respectively, breached neither the upper nor the lower MIP thresholds.

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 three-year percentage changes in REER values for the EU-28 in 2019. Ireland had the third most negative percentage change in REER value in 2019. Sweden reported the largest decrease at -8.3%, while Czechia experienced the largest increase at 8.7%.

Indicator 4: Export Market Share

Source publication: International Accounts Q2 2020

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 exports relative to total world exports. This trend changed in 2015, when the indicator value rose to 37.6%. 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 show positive 5-year percentage changes from 2015 onwards and stood 71.0% in 2019.

Supplementary analysis:

Get the data: Eurostat database

Ireland had the highest export market share indicator value in the EU in 2019, at 71.0%. As this indicator is calculated as a five-year percentage change, this figure continues to reflect the large year-on-year increase of 40.7% 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 negative export market shares, breaching the MIP threshold of -6%. Conversely, China showed strong positive changes in export market share from 2010-2016, declining significantly after 2016 to stand at 5.2% in 2019. 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 and Expenditure 2019

Get the data: StatBank N1901 (Employee Compensation/Total Labour Costs), Eurostat database (Total Employment, Number of Employees), Eurostat database (GDP at Market Prices)

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 index corresponds to an increase in labour costs relative to labour productivity, resulting in lower competitiveness. This Macroeconomic Scoreboard indicator is presented as a three-year percentage change.

Ireland has not breached the MIP threshold for this indicator at any point during the period 2010-2019. The indicator value has been consistently negative, which would indicate increasing competitiveness for Ireland, however it should be noted that large negative values of this indicator from 2015 to 2017 were substantially affected by the level-shift in GDP in 2015. In 2019, the three-year change in Ireland’s nominal unit labour cost was -4.4%. 

Supplementary analysis:

Get the data: StatBank N1901 (Employee Compensation/Total Labour Costs), Eurostat database (Total Employment, Number of Employees), Eurostat database (GDP at Market Prices)

Breaking nominal unit labour cost into its two components shows the interrelationship between labour costs and productivity. Since 2010, the three-year percentage changes in labour costs have been consistently lower than those in labour productivity. From 2011 to 2012, and again from 2015 to 2017, labour productivity increased at a significantly faster rate than labour costs, resulting in sharp declines in nominal unit labour costs and increasing overall economic competitiveness. The gap between labour productivity growth and labour cost growth was narrower from 2013 to 2014 and again from 2018 to 2019. This resulted in smaller decreases in nominal unit labour costs and more moderate growth in overall economic competitiveness during these periods. It should be noted that labour productivity increases from 2015 to 2017 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 2020

Get the data: StatBank HPA06 (Residential Property Price Index), StatBank N1905 (Consumption at Current Market Prices by Item and Year), StatBank N1906 (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. These series are chain linked to 2015 for comparability across countries.

Figure 2.13 shows that Ireland experienced decreases in the deflated house price index from 2010 to 2012, following the financial crisis. A turning point was seen in 2013, with neither an increase nor a decrease in deflated house prices over the year. From 2014 to 2018, Ireland saw large increases in the deflated house price index and breached the MIP threshold of 6% in each of these years. These increases show that there was higher inflation in the Irish housing market relative to the final consumption of households. In 2019, the deflated price index showed no year-on-year change. This was a result of the same level of inflation being seen for house prices as that of final consumption expenditure of households in general, approximately 2.3% for both. This constituted the first time in 6 years that this indicator did not breach the MIP threshold.

Get the data: StatBank HPA06 (Residential Property Price Index), StatBank N1905 (Consumption at Current Market Prices by Item and Year), StatBank N1906 (Consumption at Constant Market Prices by Item and Year)

Figure 2.14 shows a comparison of the year-on-year percentage change in the deflated house price index between Dublin and the rest of the country. In 2010, Dublin experienced a greater drop in the deflated house price index compared to the rest of the country. Similarly, Dublin experienced faster growth in the deflated house price index compared to the rest of Ireland in 2013 and 2014, as house prices began to recover post-recession. From 2014 to 2018, the deflated house price index both for properties within and outside Dublin increased, with prices outside Dublin increasing at a faster rate than prices in Dublin from 2015. In 2019, for the first time since 2012, the annual percentage change in the deflated house price index for Dublin was negative (-2.3%), while the corresponding figure for properties outside Dublin remained positive (2.4%).

Indicator 7: Private Sector Credit Flow

Source publication: Institutional Sector Accounts Non-Financial and Financial 2019

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 2010. The threshold breach in 2011 was caused principally by refinancing operations of large multinational groups during this period. In 2019, private sector credit flow was -9.1% of GDP, well below the MIP threshold of 14%.

Supplementary analysis:

Source publication: Institutional Sector Accounts Non-Financial and Financial 2019

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, as shown in 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 202.4% of GDP at the end of 2019.

Supplementary analysis:

Source publication: Government Finance Statistics October 2020

Get the data: StatBank GFQ13 (Government Debt), StatBank N1924 (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 the ratio of GG debt to GDP, which is the standard approach to comparing public debt internationally. It should be noted that the MIP threshold is set at the same level as the Stability and Growth Pact Treaty obligations (see Stability and Growth Pact chapter).

The GG debt ratio grew rapidly from 2010 to its peak in 2012/2013 of 119.9%, an increase of 34 percentage points. The debt ratio has been in decline since 2013. In 2014 the Irish state repaid the borrowings provided by the IMF, as well as the bilateral loans from Sweden and Denmark, thus reducing both the ratio and level of debt. The decline in the GG debt ratio of 28 percentage points in 2015 is primarily due to the exceptional level of growth in GDP that year. The ratio has continued to decrease in subsequent years, more as a result of GDP increases than any substantial reduction in nominal debt. By the end of 2019, GG debt as a percentage of GDP decreased to 57.4%, constituting the first time in over 10 years that this indicator did not breach the MIP threshold. The value of GG debt in 2019 stood at €204.2bn.

The GG Debt level 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). Presenting debt in the context of GNI* can be more useful for analytical comparisons and, in particular, as a measure of the debt burden. In 2015, there is a significant change in the differential between government debt as a percentage of GDP and that as a percentage of GNI*, as a result of the substantial jump in GDP during the year. The difference between government debt as a percentage of GDP and government debt as a percentage of GNI* stood at 47.3% 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 2019, the reduction in government debt as a percentage of GDP/GNI* is a result of increases in the values of GDP and GNI*, with the level of government debt in monetary terms at the end of 2019 higher than it had been in 2015. For further information on GNI* and its calculation see the National Income and Expenditure 2019.

Source publication: Government Finance Statistics October 2020

Get the data: StatBank GFQ13 (Government Debt), StatBank N1924 (GDP)

Figure 2.22 shows a breakdown of general government debt into its constituent debt instruments, each shown as a percentage of GDP. The significant increase in loan liabilities during the years 2010-2013 is predominantly a result of the EU-IMF programme of financial support. In 2011, currency and deposits saw much larger growth than debt securities or loans. 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. The decline in the size of currency and deposits once again in the period from 2013 to 2015 is related to the liquidation of IBRC. Between 2015 and 2019, all debt instruments experienced a decrease as a percentage of GDP.

Source Publication: National Income and Expenditure 2019

Get the data: StatBank N1924 (IE GDP), StatBank GFQ13 (IE Government Debt), Eurostat database 

Expressed as a percentage of GDP, Ireland’s general government gross debt (57.4% of GDP) is mid-table, or 14^th lowest, with respect to other EU member states. Ireland's GG Debt as a percentage of GNI* (modified GNI excluding globalisation effects) was 95.6%. If GNI* for Ireland is comparable to GDP for other countries which are less significantly affected by globalisation, then Ireland had the sixth highest level of government debt as a ratio of economic activity in the EU in 2019.

Indicator 10: Unemployment Rate

Source publication: Labour Force Survey Q2 2020

Get the data: StatBank QLF02

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 2012, dropping below the threshold in 2017. The unemployment rate was 5.8% in 2019, the lowest level over the 10-year period.

Supplementary analysis:

Get the data: StatBank QLF04

Figure 2.25 shows the number of unemployed people, as a three-year average, broken down by age, illustrating the share of those who are younger than 25 and those who are aged 25 and over. From 2010 to 2011, unemployment increased both for those aged 15-24 and those aged over 25 (Figure 2.25). The number of unemployed people in both age groups has been decreasing since 2012. In 2019, approximately 100,000 people aged over 25 were unemployed, while the corresponding figure for those aged between 15 and 24 was just over 38,000.

For further information on the unemployment levels 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 2019

Get the data: StatBank IFI03

This indicator measures the year-on-year change in the sum of all liabilities of the financial sector. Figure 2.27 shows that this indicator only breached the MIP threshold of 16.5% in the year 2014. The generally positive year-on-year growth in total financial sector liabilities over the period 2010-2019 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 2010, as can be seen in Figure 2.28. For more information on the financial sector see The Financial Sector in Ireland's National Accounts 2018.

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 indicator is measured as a three-year percentage point change. This indicator breached its threshold of -0.2pp during the years 2010-2012. Since 2013, the three-year percentage point change in the activity rate has been positive, with a value of 0.6pp in 2019.

Get the data: Eurostat database

Figure 2.30 shows the change in Ireland’s activity rate compared with selected EU countries. From 2010 to 2012, the change in Ireland’s activity rate breached the MIP threshold of -0.2pp. While Germany and the Netherlands did not breach the MIP threshold at any time during the ten-year period, the United Kingdom and Greece breached the threshold in 2011 and 2013 respectively.

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 2020

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 percentage point change of the long-term unemployment rate is 0.5%. Ireland’s long-term unemployment rate increased from 2010 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 2020

Get the data: StatBank QLF04 (Duration of Unemployment), Eurostat database, Statbank QLF06 (Persons in Labour Force)

In 2019, Ireland had the 14th lowest long-term unemployment rate in the EU (Figure 2.35).

Source publication: Labour Force Survey Q2 2020

Get the data: StatBank QLF04 (Duration of Unemployment), Eurostat database, Statbank QLF06 (Persons in Labour Force)

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 2020

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 2010 and 2012, with the highest increase of 19% seen in 2010. Substantial reduction in youth unemployment can be seen since 2013.

Supplementary analysis:

Get the data: StatBank QLF18

Classifying the change in youth unemployment by age, Figure 2.38 shows that 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 2019. Ireland's youth unemployment rate sits mid-table, 14th highest, in 2019.

Get the data: Eurostat database

Figure 2.40 shows the youth unemployment rate for the period 2010-2019. This is the number of 15-24 year olds unemployed expressed as percentage of the labour force (also known as active population) of the same age. Compared to the Netherlands and Germany, Ireland’s youth unemployment rate has been relatively high since 2010, but remains significantly lower than that of Spain and Greece.