Press release
Minister Donohoe notes the robust recovery in the domestic economy last year
Published on
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Published on
Last updated on
The CSO today (4 March) published the Quarterly National Accounts for the fourth quarter of 2021.
Commenting on the figures, Minister for Finance, Paschal Donohoe TD, said:
“Today’s data show that the economy – as measured by Modified Domestic Demand – increased by 1.3 per cent in the final quarter of last year. It is now 7 per cent higher than it was immediately before the pandemic, which is a positive development.
“The main takeaway for me from today’s figures is the confirmation of the robust growth in the domestic economy in 2021, notwithstanding the lockdown in the first part of the year and on-going Covid challenges over the course of last year. For the year as a whole, Modified Domestic Demand increased by 6½ per cent last year.
“Consumer spending grew by 5½ per cent, supported by the strength of the labour market where we now have a record level of more than 2½ million people in employment. Wages are also growing, up 8 per cent last year according to today’s figures. These trends are also in-line with strong growth in VAT and income taxes recorded in 2021.
“Encouragingly, investment grew strongly despite Covid uncertainties, with private sector investment in plant and equipment particularly strong. Construction activity, including in new housing, recovered strongly following the first quarter lockdown with the level of housing supply in line with previous years. Looking forward, the fact that we had over 30K new housing starts last year points to continued strong momentum in house building this year.
“Looking beyond these data, the post-Covid recovery is now taking place at a time of unprecedented geopolitical instability and uncertainty. Ireland’s support for Ukraine’s sovereignty and territorial integrity is unwavering. The sanctions that Ireland, along with many other countries, has imposed on Russia will have a severe and lasting impact on the Russian economy. However, the sanctions and broader conflict will not be without cost for Ireland as well.
“While our direct trade links with Russia are limited, the Irish economy remains exposed to the recent spike in commodity prices and other spill-over effects. Indeed, some of our key trading partners are highly reliant on Russia and Ukraine for certain goods and Russia plays an outsized role in global energy and commodities markets, which is likely to lead to higher inflation in the short term.
“My Department will continue to analyse and monitor these developments closely and produce an updated set of economic forecasts in the Stability Programme Update in April that will be published next month.”
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.
Irish direct trade share with Russia is small, accounting – less than ½ per cent of goods exports and 1 ¼ per cent of service exports. Ireland’s trade links with the Ukraine are also limited, with total goods and service exports accounting for less than one quarter of a per cent of Ireland’s exports.
Total employment in the fourth quarter of 2021 stood at 2,506,000 according to the CSO labour force survey.
Compensation of employees (the economy wide wage bill) grew by 8.1 per cent last year.