Quarterly Bulletin Q3 2013

More documents

Recommendations

Info

10 The Domestic Economy Quarterly Bulletin 03 / July 13 Demand Consumer spending Annual National Accounts for 2012 point to a marginal decline in personal consumption of 0.3 per cent last year, continuing a generally persistent downward trend in consumer spending over the last five years. The main determining factor underlying the weakness of consumer demand over this period has been the erosion of disposable incomes primarily due to declining employment and added to by an increase in taxes and lower transfer payments. In addition, the personal savings rate, following a sharp increase at the onset of the current crisis, has remained elevated in the face of continuing economic uncertainty and the need to reduce debt levels and to adjust to a significant decline in personal sector wealth. These headwinds, while becoming gradually less acute, will continue to restrain consumer demand over the next year and at this stage a further decline in consumer spending seems likely in 2013 with the prospect of only modest positive growth in 2014. The pattern of consumer demand during 2012 was one of significant weakness in the early months of the year, followed by recovery by mid-year, but with renewed weakness in the final quarter. This weakness became more pronounced in the first quarter of this year, when consumer spending declined by 3 per cent in seasonally adjusted terms. While indicators such as retail sales, new car registrations and indirect tax receipts pointed to a decline in consumption in the first quarter, the rate of decline was greater than expected. While some recovery in consumer spending is expected for the remainder of this year against a background of a gradual improvement in labour market conditions and a marginal pickup in consumer sentiment, it seems likely at this stage that the volume of consumer spending will decline again in 2013, by 0.5 per cent. As regards 2014, a continuation of the positive trend in labour market conditions and a less significant fiscal adjustment point to some improvement in the prospects for personal disposable incomes which may support a modest increase in consumption of about 0.4 per cent. Chart 1: Index of Volume of Retail Sales % Change Year-on-Year – 3 Month Moving Average 12 10 8 6 4 2 0 -2 -4 -6 -8 -10 -12 -14 -16 -18 -20 -22 JMMJ SNJMMJ SNJMMJ SNJMMJ SNJMMJ SN JMMJ SNJM 2007 2008 2009 2010 2011 2012 2013 All Businesses Source: CSO. Investment Core (excluding Motor Trades) Turning to investment, National Income and Expenditure accounts for 2012 indicate that investment spending declined again last year, albeit by a more marginal 1 per cent. Weakness in new housing output and home improvements was partially offset by a surprisingly strong increase in non-housing building and construction. An increase in investment in machinery and equipment of 2.6 per cent - buoyed by a significant jump in expenditure on transport equipment (mainly airplanes) - was not enough to compensate for a decline in building and construction of approximately 4 per cent. Quarterly National Accounts for the first quarter of 2013, and other available indicators, hint at a more positive outcome for investment this year. Abstracting from aircraft investment (which is volatile and subject to timing factors), investment grew by 6.3 per cent year-on-year in Q1 2013. New housing output looks to have bottomed out last year at 8,488 new units, and although running slightly behind last year’s trend for the first five months of the year, forward looking indicators suggest that new housing output is likely to register about 9,000 units this year, picking up to 11,000 units next year as demand for family units in some urban areas translates into output.
The Domestic Economy Quarterly Bulletin 03 / July 13 11 Table 1: Expenditure on Gross National Product 2012, 2013 f and 2014 f 2012 Percentage change in EUR volume price EUR millions millions 2013 f Percentage change in 2014 f volume price EUR millions Personal Consumption Expenditure 82,634 -0.5 1.0 83,122 0.4 1.2 84,451 Public Consumption 25,096 -1.5 1.4 25,064 -2.8 1.1 24,608 Gross Domestic Fixed Capital Formation 17,434 4.1 1.1 18,345 6.6 1.4 19,842 Building and Construction 9,021 4.2 1.3 9,525 7.2 2.0 10,418 Machinery and Equipment 8,413 4.0 0.8 8,820 6.0 0.8 9,424 Value of Physical Changes in Stocks 376 700 400 Statistical Discrepancy -1,348 -1,348 -1,348 GROSS DOMESTIC EXPENDITURE 124,192 0.2 1.1 125,883 0.4 1.2 127,953 Exports of Goods & Services 176,736 1.0 1.1 180,458 4.2 1.2 190,296 FINAL DEMAND 300,928 0.7 1.1 306,341 2.6 1.2 318,249 Imports of Goods & Services -136,990 0.7 1.1 -139,370 3.2 1.2 -145,561 GROSS DOMESTIC PRODUCT 163,938 0.7 1.2 166,971 2.1 1.2 172,688 Net Factor Income from Rest of the World -31,289 -32,391 -34,619 GROSS NATIONAL PRODUCT 132,649 0.3 1.2 134,580 1.3 1.3 138,069 On the non-residential side, although fiscal consolidation has led to a reduction in public capital expenditure, a healthy pipeline of FDI and continued investment in some nongovernment sectors, suggest that there will probably be some growth from these sectors this year, although the substantial year-on-year growth rate recorded in Q1 (up 14 per cent) is unlikely to persist. On the whole, building and construction is forecast to increase by 4.2 and 7.2 per cent this year and next, subject to improvement in credit conditions and the wider global economic environment. On the machinery and equipment side, while the total M&E figure registered a 37 per cent year-on-year decline in Q1 2013, the underlying figures - net of aircraft purchases - were up over 4 per cent year-on-year. In many respects, the underlying picture is more relevant as aircraft investment has a limited impact on domestic economic activity and employment since it nets out on the import side of the trade accounts and the aircraft are in fact often based abroad. Taken together with the building and construction forecasts, although coming from a very low base, investment should contribute positively to domestic demand with an increase of approximately 4.1 per cent and 6.6 per cent forecast for 2013 and 2014. Stock Changes According to the 2012 Annual National Accounts, changes to inventories made a negative contribution to overall GDP growth of 0.4 per cent last year. The projections assume a small positive contribution from stock building in 2013 which is likely to be reversed in 2014. Government Consumption In the latest National Accounts, government consumption declined in real terms by 3.7 per cent in 2012. Taking account of measures announced in detail in Budget 2013 and outlined in general terms for next year, the real level of government consumption is expected to decline by 1.5 per cent and by 2.8 per cent, respectively in 2013 and 2014.
Page 1: JULY 13 Q3 Central Bank Quarterly B
Page 5 and 6: Contents Section 1 Forecast Summary
Page 7 and 8: Section 1 Quarterly Bulletin 03 / J
Page 9 and 10: 7 Comment Annual National Accounts
Page 11: 9 The Domestic Economy Overview n A
Page 15 and 16: The Domestic Economy Quarterly Bull
Page 33 and 34: 31 An Timpeallacht Gheilleagrach Le
Page 35 and 36: 33 Financing Developments in the Ir
Page 37 and 38: Financing Developments in the Irish
Page 55 and 56: 53 Developments in the Internationa
Page 57 and 58: Developments in the International a
Page 63 and 64:
Developments in the International a
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
71 EU-IMF Financial Assistance Prog
Page 75 and 76:
EU-IMF Financial Assistance Program
Page 77 and 78:
EU-IMF Financial Assistance Program
Page 79 and 80:
77 Developments in EU Financial Ser
Page 81 and 82:
Developments in EU Financial Servic
Page 83 and 84:
Developments in EU Financial Servic
Page 85 and 86:
Section 2 Quarterly Bulletin 03 / J
Page 87 and 88:
Analysis of Recent Monetary Operati
Page 89 and 90:
Page 91 and 92:
Page 93 and 94:
Page 95 and 96:
Page 97 and 98:
Page 99 and 100:
Page 101 and 102:
Page 103 and 104:
Page 105 and 106:
Section 3 Quarterly Bulletin 03 / J
Page 107 and 108:
Statistical Appendix Quarterly Bull
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163:
show all

Quarterly Bulletin Q3 2013

Create successful ePaper yourself

Delete template?

Save as template?