Macroeconomic Scoreboard 2016

^{*Note there are some small differences between the CSO/Eurostat Current Account Balance values for 2008-2011 and 2016 related to data vintages.}

Source publication: Balance of International Payments

Get the data: StatBank BPA15, StatBank N1605 (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 (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 2007 to 2013, Ireland ran a current account deficit (measured as a three year average) and breached the lower MIP threshold from 2007 to 2010. The current account became less negative from 2010-2013. 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 2007 to 2009 follow a positive trend which changes from 2010 onwards following the financial crisis (Figure 2.5). From 2010 to 2012 the lower MIP threshold of -5% was breached followed by a recovery period during 2013 and 2014. The indicator has breached the lower threshold in 2015 and 2016.

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 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 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 EU-28 REER values for 2016. Ireland has the third lowest percentage change in REER value with Sweden and Latvia 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.

Ireland experienced negative values for this indicator each year from 2007 to 2014, with the exception of 2009, suggesting a decrease in export market shares. In most cases the MIP threshold of -6% was breached. This trend changed in 2015, when the indicator value rose to 40%, and 60% in 2016. This change largely relates to 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

Ireland’s increase in share of exports was the highest in the EU in 2016, surpassing Luxembourg by over 30%.

Get the data: Eurostat database, World Bank database

Ireland and three of its largest EU trading partners have mainly experienced declining export market shares over time. On the other hand, China has seen substantial increases each year, however these increases are at a declining rate. Ireland, in contrast, has reversed its trend of a decreasing market share seen up to 2014, and exhibited very large increases in the years 2015 and 2016. 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 Costs

Source publication: National Income & Expenditure Annual Results

Get the data: StatBank N1602 (employee compensation/total labour costs), StatBank ESQ05 (number of employees), StatBank N1604 (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 an increase in labour costs relative to labour productivity, resulting in lower competitiveness.

During the period 2007-2009, Ireland experienced positive indicator values, which breached the MIP threshold of 9% in 2007 and 2008 (Figure 2.11). 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 -20.7% in 2016. 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 N1602 (employee compensation/total labour costs), StatBank ESQ05 (number of employees), StatBank N1604 (Gross Domestic Product)

Breaking nominal unit labour costs into its two components shows the interrelationship between labour costs and productivity. Until 2009, labour costs rose at a faster rate than labour productivity compared to their respective levels three years previously (Figure 2.12). This caused overall increases in nominal unit labour costs. Since 2010 the three year changes in labour costs were continually lower than those in labour productivity. In 2015 and 2016 labour productivity increased at a significantly faster rate than labour costs thereby increasing overall economic competitiveness. Labour productivity increases since 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 N1605 (Consumption at Current Market Prices by Item and Year), StatBank N1606 (Consumption at Constant Market Prices by Item and Year)

From 2008 to 2013, Ireland experienced a decline in House Price Index (Figure 2.13) following the financial crisis. Since 2014, Ireland has seen increases in the House Price Index, meaning this indicator has breached 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 and 2016 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 N1605 (Consumption at Current Market Prices by Item and Year), StatBank N1606 (Consumption at Constant Market Prices by Item and Year)

Figure 2.14 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. In 2015 and 2016, house prices outside Dublin grew at a faster rate than those in Dublin.

Indicator 7: Private Sector Credit Flow, consolidated

Source publication: Annual Institutional Sector Accounts Non-Financial and Financial 2016

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 the relatively large positive flows of credit in the period 2007-2008, 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 2016, private sector credit flows decreased by €44.1bn over the 2015 level, standing at -19% of GDP – well below the MIP threshold of 14%.

 Supplementary analysis:

Source publication: Annual Institutional Sector Accounts Non-Financial and Financial 2016

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 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 278% of GDP at the end of 2016.

Supplementary analysis:

Source publication: Government Financial Statistics, Annual

Get the data: StatBank GFQ13, StatBank N1605 

General government gross debt (GG Debt) comprises of 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.

GG Debt as a percentage of GDP grew steadily from 2007 to its peak in 2012 of 119.6%, and breached the MIP threshold for the first time in 2009. GG Debt as a percentage of GDP has been decreasing since, with significant reductions seen in 2014 and 2015, due to the repayment of IMF loans in 2014 and a substantial increase in GDP in 2015. It has levelled out in 2016 with a small drop in debt as a percentage of GDP, from 76.9% to 72.8%. The level of GG 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. For more see file 'Impact of Government support for financial Institutions, October 2017' (Excel 25KB) (Source: CSO).

Supplementary analysis:

Get the data: StatBank GFQ13, StatBank N1605

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. This 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 decline in the size of the currency and deposits sector once again in the period from 2013 to 2015 is related to the liquidation of IBRC. In 2016, all debt instruments experienced a decrease as a percentage of GDP which was consistent with the reduction in General Government Debt as a percentage of GDP. 

Source Publication: National Income and Expenditure Annual Results 2016

Get the data: Eurostat database, StatBank N1624, StatBank GFQ13

Ireland’s gross General Government debt as a percentage of GDP (72.8%) was the thirteenth highest in the EU in 2016. Ireland's GG Debt as a percentage of GNI* (modified GNI excluding globalisation effects) was 106%. If GNI* for Ireland is comparable to GDP for other countries which are less significantly affected by globalisation, then Ireland had the fifth highest level of government debt as a ratio of economic activity in the EU in 2016. For further information on GNI* and its calculation see the National Income and Expenditure Annual Results 2016.

Indicator 10: Unemployment Rate

Source publication: Quarterly National Household Survey 

Get the data: StatBank QNQ20

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 has exceeded the indicative threshold since 2010 (Figure 2.23). The average rate of unemployment has exhibited a downward trend since 2013 and is below the threshold in 2016 for the first time since 2009.

Supplementary analysis:

Get the data: StatBank QNQ24

From 2007 to 2011, the unemployment rate increased both for those aged 15-24 and those aged over 25 (Figure 2.24). In 2016 the unemployment rate has decreased for both age groups, as it has done since 2014.

Source publication: Institutional Sector Accounts Non-Financial and Financial 2016 

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 has fallen from 2007 to 2009, as a result of deleveraging in the banking sector. The indicator only breached the MIP threshold of 16.5% in the year 2014 (Figure 2.26). This 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 2007-2010 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 2012, the Investment Funds sector has continued to expand during these years, as can be seen in Figure 2.27.

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. This indicator breached its threshold of -0.2% in the years 2009-2013. Its value lay at the threshold of -0.2% in 2014, and the indicator returned within its threshold in 2015 and 2016.

Get the data: Eurostat database

Ireland’s activity rate grew as a three year percentage change from 2007 to 2008, as it did for many comparable European countries. However, from 2009 to 2012 onwards it declined sharply, where many other countries still saw increases in Activity Rate or much smaller decreases.

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: 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 small changes in the long-term unemployment rate (measured as a three year percentage change) in 2007 and 2008, 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 continued to decline since 2014.

Supplementary analysis:

Get the data: Eurostat database

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: 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 at a rate exceeding this threshold from 2008 to 2012, peaking with an 18% increase in 2010. Substantial reduction in youth unemployment can be seen from 2014 onwards.

Supplementary analysis:

Get the data: StatBank QNQ24

Breaking down the change in youth unemployment by age, it can be seen that most of the change 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 2016 is shown in Figure 2.38. Ireland has the 13th lowest youth unemployment rate in 2016.

Get the data: Eurostat database

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