Gross Domestic Product (GDP) grew by 3% in Q2 2023, compared to Q2 2022. Adjusted for inflation and seasonal factors it grew 0.5% quarter on quarter, as published in the Quarterly National Accounts.
Institutional Sector Accounts for the total economy are presented in current prices, not adjusted for inflation. GDP in Q2 was €126bn compared to €122bn in the same quarter last year. After accounting for outflows of profits by foreign multi-nationals and other investment income, Gross National Income (GNI) was €97bn, up 9% on the €88bn seen in the April to June period 2022. As we saw in the last chapter, Non-Financial Corporations had significantly higher inflows of income on their overseas investments this quarter, and this boosted GNI.
The consumption of goods and services by households and government (P.3) was €48bn, an increase of €4bn (8%) compared to the second quarter of 2022; over the same period the Consumer Price Index increased 6% so spending is running ahead of inflation.
Capital investment (P.5) was €32bn, 9% higher than the €29bn in the equivalent period last year. After all transactions are included, Ireland was a net lender (B.9) of €10bn in the quarter, compared to €14bn in the first quarter of 2022.
Table 3.2 below is set out from the point of view of the rest of the world. That is, income received by Ireland from the rest of the world is shown as a negative.
As we saw in the chapter on Corporations, GVA increased in the Information & Communications sector and this is reflected in a €7.5bn (9.1%) increase in exports of services to the rest of the world compared to the equivalent quarter in 2022. The import of services increased by just 1.7% (€1.4bn). Industry, the other large sector trading internationally, had lower GVA growth, and Goods for Processing (contract manufacturing) declined by €11.9bn in the quarter, dragging down total exports of goods by €9.0bn (10.5%). Imports of goods were up slightly (€0.5bn, 1.3%). This left the country with a trade surplus (the negative of B.11 in Table 3.2 below, which, as mentioned is presented from the point of view of the Rest of the World) of €45.9bn. This surplus was €3.3bn (6.7%) less than in the equivalent quarter of 2022 when it was €49.2bn.
Net outflows of investment income (D.4) were €28.7bn, €5.4bn (15.8%) below the €34.1bn in the equivalent quarter in 2022. As discussed in previous chapters, this related to larger inflows of investment income to Non-Financial Corporations this quarter. With other changes in current transactions, this left the current account balance (the negative of the current external balance, B.12 in the table) at €15.8bn, a change of €2.0bn (14.7%) from €13.8bn in the second quarter of 2022.
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.
Ireland has a positive current account (CA) balance in the quarter (this is the equal and opposite of B.12 of S.2 shown in Table 3.2). The contributions of each sector can be seen in Figure 3.1 (see grey box for explanation). This quarter all sectors had a positive saving-less-investment. Government is running a surplus and households are continuing to save significantly. The Non-Financial corporations had the biggest contribution to the current account balance as their saving exceeded their capital investment by €9.5bn, in part owing to large inflows of investment income to them from abroad. However, as noted in the previous release, this does not take into account the net disinvestment as Consumption of Fixed Capital (CFC, which is a significant part of the gross saving (B.8g) of these corporations) was greater than Fixed Capital Formation (P51G).
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 households 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.
| S11 | S12 | S13 | S1M | CA Balance | |
| 2021Q1 | 14.727585115 | 1.0112411493 | -6.063038543 | 8.3082573378 | 16.96206 |
| 2021Q2 | 10.83415664 | -1.041132679 | -2.311765295 | 6.4030452984 | 16.45554 |
| 2021Q3 | 17.394933437 | 0.4961686974 | -2.638372056 | 5.0502414447 | 22.3028 |
| 2021Q4 | 0.2353006261 | 0.0213536664 | 4.6171867376 | 0.535574667 | 3.81044 |
| 2022Q1 | 12.926864105 | 0.3871962178 | -0.060722983 | 3.7646754068 | 16.0417 |
| 2022Q2 | 5.0324768988 | -0.672558899 | 1.5758163547 | 4.2622657829 | 13.80448 |
| 2022Q3 | 8.3981715456 | 0.0314443608 | 2.1547429691 | 2.6290105042 | 9.59794 |
| 2022Q4 | 16.792957133 | -1.065246439 | 5.1862008376 | -1.928092235 | 15.14395 |
| 2023Q1 | 7.2362417622 | -0.998267803 | 2.0988776551 | 2.2700398017 | 13.5716 |
| 2023Q2 | 9.5143830652 | 0.150290699 | 2.5742238946 | 3.9223135386 | 15.8306 |
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