Economics HL Commentary

Candidate name:
Candidate number:
School: Australian International School, Dhaka
Commentary: 1
Syllabus Section: Macroeconomics
Commentary dated:
Word count:
Article title: Irish GDP likely grew 2.5% in 2020 despite COVID shock - Central Bank
Source:https://www.reuters.com/article/ireland-economy-cenbank-idUSL8N2JW4TF?
fbclid=IwAR1A2Th1df4xlcCae7Sv5s65utrHEOBHpj_rBa8tOx7KwH00EN979C7vb6g
Article dated: January 22, 2021

Article:
Irish GDP likely grew 2.5% in 2020 despite COVID shock - Central Bank
Irish gross domestic product probably grew 2.5% last year despite a series of national
COVID-19 lockdowns as a strong multinational sector lifted the economy, the Central Bank
forecast on Friday.
The bank’s last forecast, in October, was for an annual contraction of 0.4%. Since, then data
showed GDP posted annual growth of 8% in the third quarter. Data for the fourth quarter has
not yet been released.

“Despite the downturn in global trade, Irish exports are projected to have grown by over 4%
last year, with this resilience reflecting the strong growth of exports of pharmaceuticals,
computer services and business services,” the Central Bank said in a quarterly economic
report.

“As a result, GDP is now estimated to have grown by 2.5 per cent in 2020,” it said.

One in eight of Ireland’s workforce is employed by foreign multinationals, including many of

the world’s largest tech and pharmaceutical companies.

The Central Bank said GDP is set to grow 3.8% this year, a slight increase on October’s
forecast of 3.4%, in part due to the British-EU trade deal signed in December and additional
spending announced in October’s budget.

If the government is forced to prolong its COVID-19 containment measures into the second
half of the year, GDP will grow by a weaker 1.5%, the bank said.

Stripping out the impact of the multinational sector, underlying domestic demand likely
suffered a sharp contraction of 7.1% in 2020.

It is set to bounce back to grow 2.9% in 2021 and 3.6% in 2022, helped by a large stock of
savings built up during the lockdowns, the bank said.

The unemployment rate will hit an average of 9.3% this year before falling to 7.8% in 2022.

The Irish government in October forecast a 2020 GDP contraction of 3.5%. Stockbrokers
Davy on Thursday forecast Irish GDP growth of 3.3% in 2020 and 4.8% in 2021.

The Central Bank also warned that COVID-19 could lead to house-price inflation by boosting
personal savings and lowering housebuilding.
Around 23,000 fewer homes are likely to be built in 2020-2022, around a quarter of forecast
supply, due to COVID-19 restrictions, the Central Bank’s Director of Economics Mark
Cassidy told journalists.

Article Source:https://www.reuters.com/article/ireland-economy-cenbank-
idUSL8N2JW4TF?
fbclid=IwAR1A2Th1df4xlcCae7Sv5s65utrHEOBHpj_rBa8tOx7KwH00EN979C7vb6g

Article Published on: January 22, 2021

Irish GDP likely grew 2.5% in 2020 despite COVID shock - Central Bank

COMMENTARY
Economic growth refers to a rise in the amount and quality of economic products and
services produced and consumed by a community.

The article shows that Ireland economy grew rapidly last year with net exports increasing
while domestic economy remained stagnant.
 Ireland GDP
100,000
60,000
20,000
-20,000 n) n s th ts es es n s g t
tio tio i ce al an iti iti tio i ce hin duc
c a rv e r v v c rv s o
ru ic e H au ti ti tru e Fi r
n st un r tS a nd e st Ac Ac ns e rS nd ti cP
m o te c e o h a s
Co m pp on d
R
ta an
C
Ot ry e
xcl . d
Co Su c ati an l Es s ur n d re st
Dom
(e d s
an an du el Re
a In ta Fo ss
s try o n i n ,E H ot nd en r e, ro
i n a G
du ati m rt, l in
m lt u
In rm , Ad A dm po n ci a rta i cu
f o l ic ns a e r
In na bl ra Fi
n nt Ag
s si o Pu n ,T s ,E
e t
of uti
o Ar
Pr r i b
Gross st Domestic Product Amount Gross Domestic Product Quarterly
€m Di % change

The Central statistics office said that GDP increased 7.8% from the beginning of January to
the end of March, compared to fourth quarter of 2020. In comparison to a year earlier the
GDP grew 11.8 percent. At a time when the EU’s economy has been slowed by the outbreak,
this would make Ireland one of the fastest rising economies in the EU. The majority of such
increase came from multinational dominated industries, which grew to 17.9% compared with
a year ago.
In the third quarter, non-multinational sectors fell by 2.1 percent. The expansion occurred
despite the fact that the Irish economy was essentially shut down between January and March
because to coronavirus restrictions. Modified domestic demand, which is considered a better
indicator of the real economy on the ground, dropped 5% year over year.

Seasonally adjusted goods trade exports increased by over €800 million in May showed in a
figure:
Some other figures are demonstrated below:
Figure-2.1
Figure-2.2
 Figure-2.3

In conclusion, despite strict sanitary measures imposed early in the year, real GDP is
expected to increase by 4.2 percent in 2021, after avoiding a fall in production in 2020 owing
to strong exports of Ireland-based multinationals. Domestic demand will improve as vaccines
are carried out and limitations are gradually removed, despite the fact that uncertainty will
continue to weigh on companies' investment decisions. Consumer spending is expected to
rise to 5.1 percent in 2022 as consumers unwind pandemic-induced surplus savings.
Word count:

Bibliography

1. Staff, R., 2021. Irish GDP likely grew 2.5% in 2020 despite COVID shock -
Central Bank. [online] U.S. Available at: <https://www.reuters.com/article/ireland-
economy-cenbank-idUSL8N2JW4TF>

2. Cso.ie. 2021. Goods Exports and Imports - CSO - Central Statistics Office.

[online] Available at:
<https://www.cso.ie/en/statistics/externaltrade/goodsexportsandimports/>

3. Cso.ie. 2021. GDP by Sector - CSO - Central Statistics Office. [online]

Available at: <https://www.cso.ie/en/releasesandpublications/ep/p-
na/quarterlynationalaccountsquarter12021final/gdpbysector/>