The big question: Is Ireland’s economy improving, or is it all one big lie?
A lot of people in Ireland can’t seem to grasp what the word “recovery” actually means. Many of them seem to be under the impression that the word “recovery” means the exact same thing as the word “recovered”. These people will launch into tirades about how the recovery is a lie, simply because they don’t have a job, or because there is a homelessness crisis, or because the unemployment rate hasn’t fallen back down to Celtic Tiger levels.
These people need to realise that the word “recovery” means “the action or process of regaining possession or control of something stolen or lost.” They need to realise that when people say that the Irish economy is recovering, they’re not saying that everything is OK or that things are back to normal. They’re not saying that Ireland’s economy has recovered. They’re saying that the economy is improving. That it is going in the right direction.
And this is true.
Is Ireland’s economy improving?
Ireland’s economy is improving and all of the statistics back it up. Whether it will continue to improve at such a fast rate remains to be seen. Whether hiccups will occur down the line or not is anybody’s guess. However, at this moment in time, as I write this, the Irish economy is improving.
GDP and GNP.
Since the middle of 2013, Ireland’s Gross Domestic Product (GDP) and Ireland’s Gross national product (GNP) have continued to rise. A quick summary of what they mean:
Here is a graph showing Ireland’s GDP:
Here is a graph showing Ireland’s GNP:
As you can see, since 2013, both GDP and GNP have continued to grow.
Personal Consumption Expenditure.
OK. So our GDP and GNP is rising. But are households spending more?
Well, according to our PCE statistics, the answer is yes. Since 2013, the market value of goods being purchased by households has continued to rise:
Statistics for retail sales can give you a better understanding of what is happening on the ground. The question here is: Have Irish people been spending more?
The answer is yes. Yes they have.
A graph showing the volume of retail sales in Ireland:
Since 2013, Irish people have been buying more things. But have we been spending more?
Here is a graph showing the value of retail sales in Ireland:
As you can see, Irish people are buying more things and they are spending more money.
The amount of new cars being registered can also provide us with a snapshot of how people are doing on the ground. Obviously, during tough economic times, people are more likely to hold off on buying a new car. Instead, they may stick with their old car or choose to purchase second-hand. However, as things start to improve, people start to spend more.
Here is a graph showing the number of new cars being registered in Ireland each year:
Since 2013, there has been an increase in new cars being registered in Ireland. If you’re wondering about the spikes, it’s because Irish people tend to purchase new cars in January and July. Why? Well, it’s because licence plates in Ireland show the year that the car was registered. If you purchase a new car between January and June in 2016, your registration number will start with 161. If you purchase a new car between July and December in 2016, it will start with 162. This basically lets everyone else on the road know that you’re driving a new car.
I’ve saved this for last, simply because many people attempt to explain away Ireland’s unemployment figures by pointing to emigration and JobBridge programmes (note: it’s kind of funny how JobBridge keeps being used as a reason for the drop in unemployment, considering there are only around 5K JobBridge workers nationwide).
Here is a graph showing the percentage of unemployed people in Ireland:
As you can see, the unemployment rate started to drop in 2012. In January of 2012, the unemployment rate in Ireland peaked at 15.2%. By December of 2012, this figure had fallen to 14.1%. In the middle of 2013, the figure stood at 13.4%. Last month, in October of 2015, the unemployment rate in Ireland was 8.9%.
Notice how the drop in unemployment corresponds with the rise in spending by Irish consumers. If the unemployment figures are duped, then how are Irish people spending more money? Did people suddenly start finding money down the back of their couches?
So; in my opinion, the answer to the question “Is Ireland’s economy improving?” is yes.