Macroeconomic Scoreboard 2015

^{*Note there are some small differences between the CSO/Eurostat Current Account Balance values for 2008-2011 related to data vintages.}

Source publication: Balance of International Payments

Get the data: StatBank BPA15, StatBank N1505 (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 Net Factor Income (PDF 222KB) . As part of the Macroeconomic Imbalance Procedure (MIP), the current account balance is expressed as a three year average in terms of a percentage of GDP. A positive current account balance usually indicates that exports are greater than imports and vice versa. From 2006 to 2013, Ireland ran a current account deficit (measured as a three year average) and surpassed the lower MIP threshold from 2007 to 2009. The current account became less negative from 2009-2013. It became positive from 2014 onwards with a substantial shift seen in 2015 as a result of the relocation of companies to Ireland and their associated contract manufacturing 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 REER estimates from 2006 to 2009 follow a positive trend which changes from 2010 onwards following the financial crisis (Figure 6). From 2010 to 2012 the lower MIP threshold of -5% was breached followed by a recovery period during 2013 and 2014. In 2015 the indicator has a value of -5.9%, just outside the threshold level, indicating increased competitiveness.

Supplementary analysis:

Get the data: Eurostat database, World Bank database

The pattern of Ireland’s REER has been very 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 which have other currencies 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 the World Bank’s World Development Indicators as a three year percentage change.

Get the data: Eurostat database

Figure 8 shows the EU-28 REER values for 2015. Ireland has the fifth lowest percentage change in REER value with the Czech Republic and the United Kingdom experiencing the lowest and highest changes, respectively.

Indicator 4: Export Market Share

Source publication: Balance of International Payments

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.

During the period from 2006 to 2014, except for 2009, Ireland experienced negative values for this indicator suggesting a decrease in export market shares. In most cases the MIP threshold of -6% was breached. In 2015 there was a change in trend with a percentage increase of 38.3%. This largely relates to the significant increase in the amount of contract manufacturing carried out on behalf of Irish companies in 2015. This rise in contract manufacturing has led to the increase in goods exports from Irish companies and is explained in the note on trade statistics published by the CSO.

Supplementary analysis:

Get the data: Eurostat database

Many European countries experienced a decline in their export market share in 2015. Ireland’s increase in share of exports was the highest in 2015, surpassing Luxembourg.

Get the data: Eurostat database, World Bank database

It can be seen that three of Ireland’s largest EU trading partners have also mainly experienced declining export market shares over time. On the other hand, China has seen increases of over 25% each year during the period, albeit these increases are at a declining rate with the rate of change slowing down over 2013-2015. Note that the country comparison data is sourced from Eurostat, with exception of the data for China which is from the World Development Indicators compiled by the World Bank.

Indicator 5: Nominal Unit Labour Costs

Source publication: National Income & Expenditure Annual Results

Get the data: StatBank N1501 (employee compensation/total labour costs), StatBank QIHQ1 (number of employees), StatBank N1502 (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 costs corresponds to the change in labour costs being greater than the change in labour productivity, resulting in lower competitiveness.

During the period 2006-2009 Ireland experienced positive indicator values which breached the MIP threshold of 9% (Figure 12). This trend was reversed after the financial crisis, leading to increased competitiveness in the Irish economy. The three year change in Ireland’s nominal unit labour cost indicator was -18.1% in 2015. Note that this estimate was substantially affected by the level-shift in GDP in 2015.

Supplementary analysis:

Get the data: Eurostat database (compensation of employees), StatBank N1501 (Gross Domestic Product)

Breaking nominal unit labour costs into its two components shows the interrelationship between labour costs and productivity. Until 2008, labour costs rose at a faster rate than labour productivity compared to their respective levels three years previously (Figure 13). This caused overall increases in nominal unit labour costs. However, between 2010 and 2012 the three year changes in labour costs were continually lower than those in labour productivity. This trend was reversed in 2013. In 2014 the labour costs and labour productivity changed at almost the same rate. In 2015 labour productivity increased at a faster rate than labour costs thereby increasing overall economic competitiveness. Labour productivity increases in 2015 were mainly due to the large increase in GDP.

Internal Indicators

Indicator 6: Deflated House Price Index

Source publication: Residential Property Price Index 

Get the data: StatBank HPM01 (Residential Property Price Index), StatBank N1505 (Consumption at Current Market Prices by Item and Year), StatBank N1506 (Consumption at Constant Market Prices by Item and Year)

From 2008 to 2012, Ireland experienced a decline in House Price Index (Figure 14) following the financial crisis. In 2014 and 2015 the values of this indicator stood at 15% and 8.3%, respectively, breaching the MIP threshold of 6%. These increases suggest inflation of the Irish housing market relative to the final consumption of households. A decrease in the rate of change in 2015 over 2014 follows the introduction of new lending regulations by the Central Bank.

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 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.

Supplementary analysis:

Get the data: StatBank HPM01 (Residential Property Price Index), StatBank N1505 (Consumption at Current Market Prices by Item and Year), StatBank N1506 (Consumption at Constant Market Prices by Item and Year)

Figure 15 shows a comparison of the year-on-year deflated house price index between Dublin and the rest of the country. From 2007 to 2010, Dublin experienced an increased rate of deflation compared to the average of the remaining counties. Similarly, from 2011 to 2014 the rate of inflation was faster for Dublin than the rest of the country.

Indicator 7: Private Sector Credit Flow, consolidated

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

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 16 shows the relatively large positive flows of credit in the period 2006-2008, predominantly related to investment in residential and commercial property. Aside from 2011, the indicator has been below the MIP threshold since 2009. The threshold breach in 2011 was caused principally by refinancing operations for large multinational groups during this period. In 2015 private sector credit flows decreased by €22.1bn over the 2014 level, standing at -6.7% of GDP – well below the MIP threshold of 14%.

 Supplementary analysis:

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

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 18). 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 303% of GDP at the end of 2015.

Supplementary analysis:

Source publication: Government Financial Statistics - Annual 

Get the data: StatBank GFQ13

General Government gross debt (GG Debt) comprises liabilities in the financial instruments 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.

General government gross debt has grown steadily since 2006 and breached the MIP threshold for the first time in 2009. The year 2015 has seen a further fall in debt to 78.6% of GDP from 105.2% of GDP in 2014 and from the peak in 2012 of 119.5%. The level of General Government gross debt since 2007 has been strongly influenced by the financial crisis, the most significant factor being the state interventions in the banking sector from 2009 onwards. A contributing factor to the reduction in the debt to GDP ratio in 2015 was the significant increase in GDP in this year.

Supplementary analysis:

Get the data: StatBank GFQ13

This figure shows a breakdown of General Government debt into its constituent debt instruments. The largest amount of growth in debt securities occurred in 2009 to fund government spending. The significant increase in loan liabilities during the years 2010-2013 is predominantly as a result of the EU-IMF Programme of Financial Support. Deposits saw the largest amount of growth in 2011. The growth in the deposit component of debt liabilities in 2011 and 2012 is due mainly 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 2008. The further decline in the size of the deposits element of debt in 2015 is related to the liquidation of IBRC. The contribution of loan liabilities to overall General Government debt has continued to decline in 2015, standing, in nominal terms, at €54.9bn. For further information about the classification of IBRC see here.

Get the data: Eurostat database

Ireland’s gross General Government debt as a percentage of GDP was the twelfth highest in the EU in 2015.

Indicator 10: Unemployment Rate

Source publication: Quarterly National Household Survey 

Get the data: StatBank QNQ20

The unemployment rate is the percentage of persons 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 has exceeded the indicative threshold since 2010 (Figure 24). The average rate of unemployment has decreased from 14.7% in 2012 to 11.3% in 2015. This downward trend has continued into 2016 and 2017.

Supplementary analysis:

Get the data: StatBank QNQ24

From 2007 to 2012, the unemployment rate increased both for those aged 15-24 and those aged over 25 (Figure 25). In 2015 the unemployment rate has decreased for both age groups, as it did in 2013 and 2014.

Source publication: Institutional Sector Accounts Non-Financial and Financial 

Get the data: StatBank IFI03

This indicator measures the year-on-year change in the sum of all liabilities of the Financial sector. The indicator breached the MIP threshold of 16.5% in 2006 and 2014 (Figure 27). The growth in Financial sector liabilities in 2006 was mainly related to bank lending to fund investment in both residential and commercial property by the private sector. Since 2007 the indicator has fallen below the threshold, corresponding with a period of deleveraging in the banking sector. 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 positive year-on-year growth in total Financial sector liabilities from 2006-2010 has also been heavily influenced by the expansion of the Investment Funds sector in Ireland. Despite a contraction in this indicator in the period 2011 to 2013, the Investment Funds sector has continued to expand during these years, as can be seen in Figure 28.

Supplementary analysis: 

Source publication: Quarterly National Household Survey

Get the Data: StatBank QNQ23 (ILO participation rates), Eurostat database

The activity 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. The particular indicator is measured as a 3 year percentage change. It has a threshold of -0.2%.

Ireland’s activity rate grew as a three year percentage change from 2006 to 2008, as did many comparable European countries. However, from 2009 to 2012 onwards it declined more sharply than all other countries.

The increases in the activity rate from 2005 to 2008 related in large part to people aged 25 to 34 years of age joining the labour force. The decline in the activity rate from 2010 onwards was due to people aged 15 to 24 leaving the labour force.

Get the data: Eurostat database

Compared to the overall EU rate and three of the country’s largest European trading partners, Ireland has consistently had a relatively low activity rate.

Indicator 13: Change in the Long-term Unemployment Rate

Source publication: Quarterly National Household Survey 

Get the data: StatBank QNQ39 (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 is a 0.5% increase compared to three years previously. After falls in the long-term unemployment rate (measured as a three year percentage change) from 2006 to 2007, Ireland’s long-term unemployment rate increased from 2009 to 2013 at rates far above the 0.5% threshold. Long-term unemployment as a three year percentage change has declined in 2015.

Supplementary analysis:

Get the data: Eurostat database

Ireland’s long-term employment rate is higher than three of its major trading partners, the Netherlands, Germany, and the United Kingdom.

Indicator 14: Change in Youth Unemployment

Source publication: Quarterly National Household Survey

Get the data: StatBank QNQ24 (ILO Participation, Employment and Unemployment Characteristics by Age Group)

The MIP threshold is a 2% change over three years. Ireland’s youth unemployment increased from 2008 to 2012, peaking with an 18% increase in 2010. Substantial reduction in youth unemployment can be seen in 2014 and 2015.

Supplementary analysis:

Get the data: StatBank QNQ24

Breaking down the change in youth unemployment by age, most of the increase and reduction in youth unemployment is driven by those aged from 20 to 24.

Get the data: Eurostat database

Ireland’s youth unemployment rate compared to its EU neighbours in 2015 is shown in the chart above.

Get the data: Eurostat database

Compared to the Netherlands and Germany, Ireland’s youth unemployment rate has been relatively high since 2009.