Update: Developments in the Irish Economy 4th July 2014

4th July 2014 - Bernard Durkan TD

QUESTION NO: 54

DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)

by Deputy Bernard J. Durkan

for WRITTEN ANSWER on 03/07/2014

To ask the Minister for Finance the extent to which the economic fundamentals remain positive for this country; and if he will make a statement on the matter.

REPLY.

Developments in the Irish economy in the year to date have been largely positive. What is particularly encouraging are the growing signs of recovery in domestic demand which suggest that some of the imbalances built up during the bubble years are being corrected.

Supported by the gradual restoration of consumer confidence over the past year, personal consumption has been healthy over the first five months of 2014. Retail sales, in volume terms, over January to May were up about 7 per cent when compared with the same period in 2013. This has been supported by a strong recovery in car sales over the year – the number of vehicles licensed for the first time in this period was 27.4 per cent higher than in January to May 2013 – as well as the strong performance of more traditional retail outlets, with core sales (excluding motor trades) up 3.4 per cent over the same period.

The rebound in retail sales is also being aided by the continued strong performance of the tourism sector. I am particularly pleased to see that the momentum gained last year – when overseas trips to Ireland increased by 7 per cent – has not been lost in 2014. The latest figures from the CSO show that overseas trips to Ireland were up by over 9 per cent year-on-year in the first five months of the year, as the substantial competitiveness gains which have been achieved are being reflected in strong growth in visitor numbers.

But, of course, no sector was hit harder in the recession than construction and, while nobody wishes to see a return to the construction-reliant economy that preceded the downturn, some recovery in the sector in vital to support wider economic growth. In this regard, the recent developments have been positive, with increasing signs of a recovery in the sector following nearly six years of continuous decline. The construction purchasing managers’ index began to grow in the second half of last year and has continued to grow strongly into this year, with the sector now having expanded for each of the last nine months. Furthermore, the Government’s recently-published Construction 2020 strategy aims to guide the continued recovery of the sector over the coming years in order to ensure that a competitive and sustainable construction sector will support a recovering Irish economy.

A recovering construction sector will also play a vital role in getting people back to work and tackling the still-high levels of unemployment. In this regard, developments over the last year have been particularly positive. Employment grew by 42,700, or 2.3 per cent in the year to the first quarter of 2014. This marked a sixth successive quarter of employment growth and was driven entirely by full-time employment which increased by 46,400. On foot of this, the unemployment rate continues to fall, from a peak of 15.1 per cent in 2012 to 11.6 per cent last month.

Update: Developments in the Irish Economy 4th July 2014

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