Quarterly GPD up 6.3% in second quarter as Covid brakes slacken
New figures from the Central Statistics Office show that the economy – as measured by gross domestic product – grew 6.3% in the second quarter of 2021 compared to the first three months of the year.
On an annual basis, GDP grew 21.6% in the second quarter, the CSO said, as the economy was in the depths of the Covid-19 crisis last year.
Meanwhile, GNP – a measure of economic activity that excludes profits of multinationals – rose 6.7% in the quarter.
The CSO said the easing of restrictions related to Covid-19 resulted in increased levels of economic activity for many sectors focused on the domestic market during the three months from April to June.
He noted that the construction sector grew by 22.9% while the distribution, transport, hotel and catering sector grew by 0.7%.
Growth also continued in the more globalized sectors of the economy, with the information and communication sector increasing by 6.2% and industry by 3.6% over the three-month period.
Overall, sectors dominated by multinational companies with foreign capital increased by 3.7% compared to the first quarter of the year while value added in sectors focused on the domestic market increased by 2%.
Today’s CSO figures also show that as restrictions on Covid-19 have eased, personal spending on goods and services has increased by 12.6%.
Public spending on goods and services rose 0.9% in the quarter, the CSO added.
This is the first time since the start of the pandemic that sectors of the economy focused on both the domestic market and exports have recorded strong growth.
Today’s figures also show that the Modified Domestic Demand Indicator (MDD) – a measure of the underlying performance of the economy – rose 8.4% on a quarterly basis.
It was the second-highest quarterly growth rate on record, just after the third quarter of last year, when the economy rebounded after the first Covid-19 lockdown.
Private label increased by 15% on an annual basis, added the CSO.
Commenting on today’s figures, Finance Minister Paschal Donohoe said that all sectors of the national economy saw strong growth in the second quarter of 2021, with consumer spending and construction particularly strong.
Paschal Donohoe noted that consumer spending rose 12.5%, although it is still below its pre-pandemic level.
“With regard to housing in particular, in the four quarters through the end of the second quarter of this year, there have been approximately 21,000 housing units completed and 27,000 housing starts. This will provide a much needed boost to the government. second half of this year, the housing supply to be strengthened by the government’s new strategy of housing for all, ”he added.
The Minister of Finance predicted that the recovery of private label should continue in the third quarter with the reopening of more sectors, albeit at a somewhat slower pace.
He said payment card transaction data showed positive growth rates but declining spending in July and August.
“Likewise in the labor market, the number of people benefiting from the pandemic payment fell by 70% from the peak of the third wave of 486,000 in early February, with sharp declines observed in June and July, although the rate of decline moderated in August, ”he added.
“While I am aware that there are many risks on the horizon, especially in terms of the unpredictable epidemiology of the virus, today’s positive economic data as well as robust tax data for August that we release later. back in the day means we can approach the next budget with a much higher degree of confidence than at any time since the start of the pandemic, ”Donohoe said.
Ireland confirmed as EU’s fastest growing economy
Today’s GDP figures confirm Ireland’s position as the fastest growing economy in the European Union.
This is largely due to the continued strong performance of the pharmaceutical and IT services sectors, both of which are dominated by foreign-invested multinationals.
In an analysis accompanying today’s figures, the CSO shows how the industrial sector, which includes pharmaceutical companies, has grown 158% since the first quarter of 2019.
The information and communication sector, which includes the computer services sector, grew by 143% during the same period.
The CSO also revealed some of the key findings of a survey it conducted of 60 of the largest companies in these industries.
He found that for pharmaceutical companies, the main areas of business in Ireland that have contributed to their growth are “active pharmaceutical ingredients” which are the ingredients of drugs, “biologics” which are medicinal ingredients based on drugs. ‘living organisms and the manufacture of “bulk doses”. which is another component of drugs.
For IT services companies, the main business areas contributing to growth were software licensing, web services, and product research and development.
A breakdown of today’s CSO figures shows how dramatic the recovery has been in parts of the national economy.
Clothing sales increased about 190% in May from April. Department store sales rose nearly 170% in the same month, while book sales rose about 140% in June.
Accommodation and food also saw a 90% increase in June.
Overall personal consumption expenditure increased 12.6% in the second quarter from the first, up 6.9% for goods and 16.8% for services.
On an annual basis, personal consumer spending is up 19.4% with consumption of goods up 27.3% and services up 14.5%.
As was the case during the lockdown, online sales plummeted with the reopening of stores, the CSO noted.