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Ireland: GDP down 1.0% in 2010, GNP down 2.1%

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Annual declines in GDP and GNP

Preliminary estimates for the year 2010 indicate annual declines of 1.0 per cent in GDP and 2.1 per cent in GNP. While 2010 is the third year of falling output the annual rate of decline in both GDP and GNP has moderated compared with the 2008 and 2009 results. On a seasonally adjusted basis, constant price GDP for the fourth quarter of 2010 fell by 1.6 per cent compared with the previous quarter while the corresponding quarterly change for GNP was an increase of 2.0 per cent.

Industry the only growth sector in 2010

Industry (excluding Building and Construction) grew by 13.2 per cent between 2009 and 2010. However, this growth was not sufficient to counterbalance the declines that took place in the remaining sectors of the economy. Building and Construction fell by 31.8 per cent, similar to the decline experienced in 2009. Activity in the Agriculture, Forestry and Fishing sector contracted by 6.4 per cent in 2010 while Public Administration and Defence and Other Services both experienced volume declines of 2.7 per cent between 2009 and 2010. Activity in Distribution, Transport and Communications declined by 1.5 per cent in the year.

Strong export growth but imports also rising

On the expenditure side of the accounts although exports performed strongly in 2010, imports have also been increasing, particularly in the third and fourth quarters.

Overall, the growth in net exports of €5.7 billion at constant prices (24.5%) did not provide a sufficient counter weight to the decline of €7.9 billion (-5.6%) in the combined total of the components of domestic demand. Personal consumption, which accounts for nearly two thirds of domestic demand, fell by 1.2 per cent while Government expenditure was 2.2 per cent down on 2009. Capital formation registered the largest percentage decline (-27.8%) reflecting the weakness of the construction sector. While stocks continued to decline in 2010 the extent of the fall was not as pronounced as in 2009.

GNP result impacted by Foreign Earnings of Irish Resident PLCs

Net factor income outflows increased by some €1.1 billion between 2009 and 2010 transforming an annual GDP decline of 1.0 per cent into a 2.1 per cent decline in GNP. These increased outflows over the year were the result of higher net profit outflows and increased interest payments on Government debt. However, the impact of inflows of profits earned abroad by Irish based Public Limited Companies, highlighted last quarter, offset to some extent the negative impact of these outflows.

Quarterly decline in GDP and increase in GNP in Q4 2010

Initial estimates for the fourth quarter of 2010 indicate a seasonally adjusted decline of 1.6 per cent in GDP at constant prices and an increase of 2.0 per cent in GNP compared with Q3 2010. On the output side Industry ( excluding Building and Construction) increased by 2.5 per cent. There were quarterly seasonally adjusted declines in Building and Construction, Distribution, Transport and Communication and Other Services.

On the Expenditure side the decline in net exports of multinational companies compared with the third quarter resulted in a substantial decrease in profits thereby reducing the overall net factor outflows and feeding in to the quarterly GNP increase of 2.0 per cent.

Source : CSO

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