Business representation group Ibec took a look today at the newly published Q2 National Accounts Data published by the Central Statistic Office, and said the figures provide further evidence of solid economic momentum, but worrying signs for the export economy are emerging.
According to the statistics, GDP and GNP rose by 0.6% in the second quarter of 2016. Total domestic demand increased by 9.1% in Q2 2016 over Q1 2016. Capital formation and net imports rose by 38.9% and 11.8% respectively, while personal consumption and net exports declined, by 0.5% and 31.4% respectively.
Commenting on the Q2 National Accounts data Ibec Director of Policy and Chief Economist Fergal O'Brien said: “While there was some extreme volatility in the 2015 economic data, the numbers now seem to have settled down. The GDP and other measures all point towards very solid economic growth in 2016 of about 4%.
“Beneath the headline data a number of issues are noteworthy: consumer spending is not performing as strongly as fundamentals such as jobs and wage growth would point to; construction investment is now ramping up; and there are some worrying signs in the relative weakness of the export sector. While consumer spending was fairly solid across the average of the first two quarters of this year, the slowdown in Q2 was a little surprising given the acceleration in jobs growth and strong consumer tail winds. Nevertheless, we expect consumer spending to make a strong contribution to overall growth this year.
“The annual drop in goods exports of over €1.5 billion in Q2 is more worrying. While it is probably too early to assign this decline to Brexit related currency movements, it should focus the minds of policy makers on the difficult trading conditions facing many exporters. To avoid a substantial decline in export activity over the coming quarters it is crucial that Government responds assertively to the competitiveness challenge posed by Brexit in October's budget.”
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