05 June 2020
Assistant Director General with responsibility for Economic Statistics, Jennifer Banim, commented:
'Provisional results for Quarter 1, 2020 show an increase of 1.2% in Gross Domestic Product (GDP) and an increase of 0.1% in Gross National Product (GNP) compared with Quarter 4, 2019. Net exports of goods and services increased by almost €1.9 billion in the quarter, driving the increase in GDP. In the domestic economy, personal spending decreased by 4.7% reflecting the impact of the COVID-19 related restrictions that came into effect in mid-March.
The impact of the COVID-19 restrictions varied across the sectors of the economy in Quarter 1, 2020. In the globalised sectors of the economy, growth continued, with Industry increasing by 15.4% in volume terms and the Information & Communication sector growing by 1.5% in the quarter. However, the sectors operating mainly in the domestic market have been impacted. The Distribution, Transport, Hotels and Restaurants sector contracted by 12.7% while Construction decreased by 1.6%. The Agriculture, Forestry and Fishing sector shrank by 4.7% in the quarter.
Net Exports of Goods and Services increased by almost €1.9 billion in Quarter 1, 2020 compared to Quarter 4, 2019, driving the increase in GDP. While significant imports of IPP were recorded in the quarter, total imports of goods and services contracted by 1.5%. Exports of goods and services increased by 0.2%, leading to strong growth in the overall trade balance.
The IPP imported in Quarter 1, 2020 drove the €51.4 billion of Capital Investment in the quarter. It’s important to note that the impact of IPP imported in the quarter was neutral on GDP as the increase in the capital stock was offset by the corresponding imports recorded for these products.
Looking in detail at expenditure in the economy, we see that personal spending (the PCE indicator) decreased by 4.7% in the quarter with COVID-19 restrictions significantly impacting consumption in March. The domestically focused PCE indicator measures spending by individuals on goods and services and accounted for about 30% of all economic activity in the quarter. Government spending on current goods and services increased by 0.5% in Quarter 1, 2020.
Modified Domestic Demand (MDD) - which measures personal, government and investment spending - decreased by 1.6% in the quarter. The MDD indicator excludes the globalisation effects of trade in IPP and trade in aircraft by leasing companies and is an important indicator of underlying domestic demand, particularly for understanding possible effects of COVID-19 related restrictions in future quarters.'
Commenting on the results for the International Accounts for Quarter 1, 2020, Jennifer Banim continues:
'In the Balance of Payments results for Quarter 1, 2020, the Current Account recorded a deficit of €15.2 billion in flows with the rest of the world, compared with a surplus of €11.0 billion in Quarter 1, 2019. The change in the overall balance was driven by an increase in IPP imports and we saw imports of Business Services increase to €51.2 billion in the quarter compared to €18.1 billion in Quarter 1, 2019.
However, royalty imports for pharmaceutical products and preparations decreased by almost €1 billion in Quarter 1, 2020 when compared with Quarter 1, 2019 and the accumulation of the IPP relocations to Ireland in recent years may now be leading to reduced quarterly royalty payments abroad.
Today’s International Accounts publication includes a table of Current Account transactions with the UK. The results show a surplus of €2.2 billion for Trade in Goods and Services with the UK in Quarter 1, 2020. The trade surplus was offset by a deficit of €3.4 billion for income flows, giving an overall Current Account deficit of €1.2 billion with the UK in the quarter.'
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