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Update: Economy shrinks… in 3 months
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More figures out today and another graph that made me wince…
EDIT: In a comment Ben has drawn my attention to apparently incorrect reporting from RTÉ, The Irish Times and myself - according to Karl Whelan of Irish Economy the economy did not shrink by 8.5% as reported by, well, a lotta places [links coming], including us at Irish Election. See his post here.
Quarterly National Accounts for Q1 2009 were published by the CSO earlier, here’s The Irish Times’ early piece on it – the economy shrank by 8.5%, 1.5% according to Whelan, that’s the main bit of it. The report is [still] not one Fianna Fáilers or Greens will want to show the grandkids. Economic activity measured by gross national product dropped by a massive 12%. Michael Connelly of the CSO said on RTÉ News that it was “unprecedented, we haven’t seen this since we started our quarterly series… you have to go back to the 1950s to see comparable figures but they were smaller figures and on a yearly basis then”. Remember, 12% is the figure for the quarter alone, you can only imagine what the annual figures will look like when you consider that people have stopped spending.
Looking at other figures released by The Central Bank will tell you that people don’t plan on starting to spend again anytime soon either. Banks aren’t loaning – private sector credit rose a negligible amount. In the last year people repaid €23m more than they spent on their credit cards. Both of those are indicative of the drop in spending. Incidentally, I think the latter also indicates the degree to which the foundations of our Celtic Tiger economy were made of plastic.
If I remember leaving cert economics curriculum correctly – lack of capital expenditure often means a forthcoming lack of working capital which usually results in a further drop in employment figures. Green shoots? Nah, mate…
The fetid stench of a decomposing Celtic Tiger will be palpable from tomorrow’s newspapers.
The economy did not shrink 8.5% in three months.
http://www.irisheconomy.ie/index.php/2009/06/30/2009q1-quarterly-national-accounts-release/
“8.5 percent is the cumulative decline over the past year rather than the decline that occurred over the first three months of the year. ”
and
“This series declined 1.5 percent during the first three months of the year, not nearly as bad as the revised 5.4 percent decline that occurred during the fourth quarter of last year. So, while the year-over-year declines are unprecedented, RTE’s reporting of the story as implying the economy was contracting at an unprecedented pace during the first quarter is not correct.”
Even if the media got it wrong, Richard Bruton got it right. Figures seem a bit off though:
“New economic figures from the CSO suggest that talk of the green shoots of economic recovery are sadly premature, and reveal the unprecedented contraction in the Irish economy over the last 12 months, according to Fine Gael Deputy Leader & Finance Spokesman Richard Bruton TD.
“There is no sign of the long-awaited green shoots of recovery in the CSO’s latest set of economic figures. But there is plenty of evidence of the serious failure of Fianna Fáil policy in recent years, and how the recession was largely driven by Government mistakes.
“By the first quarter of this year, Gross National Product had fallen by a staggering 12% in 12 months, and by 4.5% since the last quarter of 2008.”
Surprisingly, no statement from Labour or Sinn Fein spokespersons on the CSO figures. maybe, they just didn’t ‘get it’ at all?
Well, perhaps they’re waiting until they can consider the figures in the round rather than rushing in as almost all others and getting it wrong, with the honourable exception of Karl Whelan (and yes those figures quoted by RB above do seem a bit off), did. I think one of the worst aspects of this crisis is the tendency to rapid response by all and sundry. The economy isn’t going to change radically overnight. I’d vastly prefer a thoughtful working through the implications rather than a chase after the most convenient, if muddle-headed, soundbite.
Whelan is actually a bit less pessimistic given the figures, which I think is interesting.