- GDP fell by 6.1 per cent quarter-on-quarter in the second quarter of 2020 – the largest quarterly fall on record.
- Annual GDP decline of 3 per cent compared with the second quarter of 2019
- GDP decline not as severe as in other advanced economies due to resilience of exports.
- Modified Domestic Demand – proxy for domestic economy – fell by over 15 per cent year-on-year.
- Personal consumption fell by 22 per cent year on year in the first quarter while new construction investment fell by 35 per cent with most retail and construction closed for the majority of the quarter.
- Exports flat in annual terms, with growth of over 7 per cent in goods exports (mainly pharma).
The CSO today (7th September) published the Quarterly National Accounts for the second quarter of 2020. Commenting on the figures, Minister for Finance, Paschal Donohoe T,D, said:
“Today’s figures show the largest quarterly decline in GDP on record, with the second quarter fall of 6.1 per cent surpassing the 4.7 per cent decline recorded in the fourth quarter of 2008. However, the hit was not as severe as many of our trading partners, for instance the UK, Eurozone and the US where GDP declined by over 20, 12 and 9 per cent respectively in the same period.
“Overall the numbers are broadly as expected based on dataflow on the second quarter released over the course of the summer. They very much highlight the dual economic impact of the pandemic with net exports positively contributing to GDP in year-on-year terms on the back of robust growth in pharma exports, while the domestic economy suffered a severe hit. Despite the severity of the national lockdown, a large portion of manufacturers continued to trade and this is reflected in our export numbers. However many of our jobs-rich domestic sectors were temporarily closed giving rise to the large contraction in domestic demand seen today.
“Looking forward, a recovery in GDP clearly occurred in the third quarter. Retail sales in July were almost 5 per cent above the pre-pandemic level with a range of ultra-high frequency indicators, which will be published by the Department later today, pointing to a continuation of this trend in August, albeit at a more modest rate of growth. Similarly, in the labour market, the numbers of persons on the pandemic unemployment payment has fallen by over 60 per cent from a peak of 600,000 in early May, with large declines seen throughout July and early August. My Department will be producing a new set of forecasts in the coming weeks in the run-up to the Budget.
“The policy response to the Covid-19 crisis has been swift and forceful. The Government has acted to cushion, in as much as possible, the contraction in private sector demand. Measures to support the economy have looked to protect household incomes and to help firms to re-open and to bridge-the-gap for those still affected by restrictions. This policy response is possible as a result of the careful management of the economy and the public finances in recent years which means that we entered this period of uncertainty from a position of strength. The Government’s plan for protecting our citizens’ health and that of the economy will be set out in the coming weeks, firstly in the form of a comprehensive plan on living with Covid, quickly followed by the Budget and an economic recovery plan.”
Ends
Note to editors:
Modified (final) domestic demand, a proxy for the domestic economy, is the sum of personal and government consumption and investment, excluding investment in imported IP and aircraft for leasing. It also excludes changes in the value of stocks.