Quarterly National Accounts: Quarter 2 2020
Data from the latest Quarterly National Accounts make for sobering if unsurprising reading. At first glance we see that Headline GDP was down just 3% compared to the same period in 2019. However, this outturn is flattered by the impact of multinational activity within the industry sector and there were sharp falls in personal consumption (-22.1%), in building and construction (-35.4%), and in modified domestic demand (-16.4%).
Particularly badly hit sectors included construction (-34.6%), arts and entertainment (-67.9)%, and distribution, transport, hotels and restaurants (-32%). Construction output fell to its lowest level since the first quarter of 2016. Value added in arts and entertainment was lower than at any point since at least 1995 (the start of the data series), while value added in distribution, transport, hotels and restaurants was down to 2002 levels. Overall, the economic damage was principally located in lower paid sectors which explains the relatively limited impact on income tax receipts.
Modified domestic demand (which strips out the impact of items like intellectual property imports and aircraft leasing) fell by 14% between the first and second quarter of 2020. Even within the second quarter there were significant gyrations in economic activity with much of the economy going into hibernation throughout April followed by big improvements as lockdown was eased in May and then again in June.
While the second quarter figures are grim they reflect the impact of the COVID-19 restrictions and we anticipate a strong rebound in the months ahead as long as policy remains supportive. The third quarter figures which are due in early December will give us a much better picture of the extent to which there has been medium-term damage to the economy.
For further information, or to arrange an interview with Dr Tom McDonnell or with Paul Mac Flynn (co-directors), contact Louisa O’Brien, NERI media coordinator, 085 868 9068.