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Total Economy

Households continued pandemic-level saving between April and June 2022

CSO statistical publication, , 11am

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 second quarter of 2022, driven mainly by foreign-owned non-financial corporations' higher gross value added. GDP was €119bn, €18bn (18%) higher than 2021-Q2. After outflows to foreign investors, Gross National Income (GNI, B.5g) was €84bn, up €11bn (15%). More information is contained in the Quarterly National Accounts.

The consumption of goods and services by households and government (P.3) was €41bn, an increase of €4bn (11%) compared to the second quarter of 2021 when more COVID-19 restrictions were in place. Capital investment was €26bn, €7bn higher than the equivalent period last year, driven, as we saw, by more investment in Intellectual Property and Machinery & Equipment. After all transactions are included, Ireland's net lending (B.9) was reduced by €2bn compared to the equivalent quarter last year. Nonetheless, Ireland had net lending of €16bn to the rest of the world in the quarter. 

Table S.1 Domestic Economy

Rest of the World Sector (S.2)

The growth in Ireland's GDP has been driven by higher net exports, or, from the point of view of the rest of the world, a more negative balance of goods and services with Ireland. Both imports and exports have been increasing in recent quarters, including Q2-2022. The gap between exports and imports has widened to €52bn in the latest quarter, an increase of €7bn since the same quarter of 2021. This balance of goods and services includes the large imports of capital goods and services that are used in production over several years, yet the exports this quarter continued to outpace the imports.  

Because most of these net exports were by foreign-owned corporations, the extra profit they generated flowed out to their owners abroad. Net outflows of investment income (D.4) also rose by €7bn. This left the current external balance (B.12, the current account balance) largely unchanged compared to Q2-2021.

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. 

Table S.2 Rest of the World

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 positive current account (CA) balance in the quarter (the negative of B.12 of S.2). The contributions of each sector can be seen in Figure 3.1 (see blue box for explanation). All sectors except the finanicals were saving more than they were investing in the quarter. In particular, households and non-financial corporations had the largest contributions to the current account balance. As we saw, households have continued the high levels of saving established during the pandemic, while their investment in capital assets such as new homes has not kept pace with this growth. 

S11S12S13S1MCA Balance
2019Q1 8.7960758687 0.9286708315 -1.820271607 1.7344246142 9.9236121791
2019Q2 -36.54006686 -0.938871234 1.0395143577 2.9918422805 -33.49071555
2019Q3 10.792825954 1.4122235084 -1.187410018 2.0374755714 11.68296727
2019Q4 -62.19230611 0.2632972946 3.9712775328 -0.056329997 -58.74102582
2020Q1 -49.7070172 0.9229687476 -3.621641208 5.9863521583 -47.49619286
2020Q2 4.2375761635 0.2345309395 -6.492552754 11.074609087 11.239156422
2020Q3 10.726088504 0.5926818373 -6.4747485 5.6992348234 9.9865852864
2020Q4 -2.852454722 -0.363415219 -1.668810421 3.8458583781 0.7596494133
2021Q1 12.574308082 1.2813328499 -6.075958001 9.5438796838 17.05372601
2021Q2 8.6688468642 -0.689227608 -2.062002188 7.5892285425 16.35933
2021Q3 19.860117512 0.8082093422 -2.578196289 6.3626776535 22.66628
2021Q4 -1.69326362 0.7575570206 4.3017605186 2.0894311807 4.58001
2022Q1 6.4047146886 1.4710863068 0.3369044793 5.2563532391 17.04292
2022Q2 5.5642766457 -1.556126652 1.4394333136 6.3283543813 15.84803