Business

Irish economy grew by 3.4% last year despite Covid restrictions

Finance Minister Paschal Donohoe described the growth as 'remarkable' (Julien Behal Photography), © PA Media

Ireland’s economy grew by 3.4 per cent last year, despite record unemployment numbers and Covid-19 restrictions affecting almost every sector.

In its preliminary results, the Central Statistics Office (CSO) said that growth continued in the more globalised sectors with industry revealing a 15 per cent upturn and the information and communication sector 14 per cent.

Sectors in the domestic market experienced significantly lower levels of economic activity, with the distribution, transport, hotels and restaurants sector contracting by 16.7 per cent and construction by 12.7 per cent.

The CSO figures show that Gross Domestic Product (GDP) increased by 3.4 per cent.

Finance Minister Paschal Donohoe described the growth as “remarkable” when seen in the light of expectations at the outbreak of coronavirus in Ireland.

Figures show that personal spending on goods and services decreased by nine per cent last year.

Overall, the multinational sector grew by 18 per cent.

These sectors last year accounted for 50 per cent of total value added in the economy, compared with a 43.4 per cent share in 2019.

However, the arts and entertainment sector took a huge hit with a drop of 54.4 per cent.

Significant changes in the personal spending indicator can be seen throughout the year as the levels of coronavirus restrictions changed.

Decreases in personal spending in the first half of the year were partly offset by an increase of 20.9 per cent in the third quarter as restrictions eased.

A decrease of 2.3 per cent was recorded in the last quarter of the year as restrictions were again imposed.

Jennifer Banim, assistant director general with responsibility for economic statistics at the CSO, said: “The pandemic impacted various sectors of the economy differently during 2020 as the levels of Covid-19-related restrictions changed over the year.

“Today’s results show the overall annual impact and the underlying quarterly variations as the levels of restrictions changed throughout the year.”

Dual economic impact

Mr Donohoe said the figures point to the dual economic impact of the pandemic, with domestic activities bearing the brunt.

“The GDP growth of 3.5 per cent for 2020 as a whole is remarkable both in an international context and compared with expectations this time last year as the coronavirus pandemic reached our shores,” he said.

“This is entirely a result of the growth in exports, up six per cent growth despite a sharp decline in world demand.

Pharma and ICT sectors recorded extraordinary export growth, driven by blockbuster immunological drugs, Covid-related products, and the shift to home working

“While 2020 was a challenging year for indigenous exports, with food and beverage exports suffering a decline, the pharma and ICT sectors recorded extraordinary export growth, driven by blockbuster immunological drugs, Covid-related products, and the shift to home working.

“However, as I have said many times, GDP is not the most accurate measure of what is going on in the economy.

“To get an overall sense of what is happening on the ground there are three key figures that I take away from today’s full-year numbers.

“Firstly, the domestic economy contracted sharply, falling by five per cent last year, a figure much closer to the typical fall across advanced economies.

“Secondly, household consumption fell by nine per cent last year, double the peak fall in 2009.

“The combined impact of a collapse in private consumption as a result of restrictions and extraordinary income supports by the State led to a near €15 billion increase in household deposits last year, some of which should unwind later this year and support the recovery.

“Thirdly, despite the widescale closure of the construction sector in the spring, I am encouraged that the overall fall in house building was considerably less than expected with a two per cent decline over the course of the year.”

Source:

www.breakingnews.ie

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