19
Budget 19 #Budget19
Budget 19#Budget19
#Budget19
Section 1 Macroeconomic Developments
Section 2 Macroeconomic Outlook
Section 3 Developments in the Public Finances
3 An Roinn Airgeadais | Department of Finance
Economic Growth in Ireland’s key trading partners remains reasonably solid…
Key Points• Significant
acceleration of
US growth in Q2
• Euro Area growth
has moderated in
2018
• UK growth
remains modest
49
50
51
52
53
54
55
56
57
0.0
0.2
0.4
0.6
0.8
1.0
2016 Q
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2016 Q
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2016 Q
3
2016 Q
4
2017 Q
1
2017 Q
2
2017 Q
3
2017 Q
4
2018 Q
1
2018 Q
2
q-o
-q g
row
th
US
US GDP PMI
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50
51
52
53
54
55
56
0.0
0.2
0.4
0.6
0.8
1.0
2016 Q
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2016 Q
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2016 Q
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2016 Q
4
2017 Q
1
2017 Q
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2017 Q
3
2017 Q
4
2018 Q
1
2018 Q
2
q-o
-q g
row
th
UK
UK GDP PMI
50
51
52
53
54
55
56
57
58
0.0
0.2
0.4
0.6
0.8
1.0
2016 Q
1
2016 Q
2
2016 Q
3
2016 Q
4
2017 Q
1
2017 Q
2
2017 Q
3
2017 Q
4
2018 Q
1
2018 Q
2
q-o
-q g
row
th
Euro Area
Euro Area GDP PMI
Significant acceleration in consumption in the first half of 2018…
Key Points
• Retail sales are
up 3.3 per cent
January – August
y-o-y
• Total
consumption is
up 3.6 per cent in
H1 -1
0
1
2
3
4
5
6
7
2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
y-o
-y g
row
th
Consumption Retail Sales
Significant acceleration in modified investment in recent quarters…
Key Points• Headline investment
remains weak
reflecting less
“onshoring” of
intangibles by MNEs
• Modified
Investment, which
adjusts for volatile
components linked
to MNEs, is up 15.2
per cent in H1 y-o-y-60
-50
-40
-30
-20
-10
0
10
20
30
2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
Contributions to Investment, pp
B&C Core M&E Aircraft
Intangibles GDFCF Mod Investment
Goods exports accelerating while services have moderated sharply…
Key Points• Goods exports
increased by 14.2
per cent in H1 y-o-y
driven by exports
from the
pharmaceutical
sector
• Services exports
increased by 2.2 per
cent, the slowest
rate of growth since
2012
-10
-5
0
5
10
15
20
25
2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2
y-o
-y g
row
th
Goods Services
Continued momentum in the labour market…
Key Points• Employment grew by
3.4 per cent in Q2, the
24th successive quarter
of employment growth
• Strong employment
growth has helped
reduce unemployment
which has fallen from a
peak of 16 per cent in
early 2012 to 5.4 per
cent in September. 5.0
6.0
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14.0
0
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5
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2014 2015 2016 2017 2018
un
em
plo
ym
en
t ra
te (
%)
em
plo
ym
en
t g
row
th, y-o
y (
%)
Employment Growth (lhs) SA unemployment Rate (rhs)
Inflationary pressures remain relatively contained…
Key Points• Annual inflation in
Ireland on a HICP
basis has averaged
0.6 per cent over
January - August
• Core inflation, which
excludes energy
and unprocessed
food, averaged 0.3
per cent over the
same period.
-2.00
-1.50
-1.00
-0.50
0.00
0.50
1.00
1.50
2.00
2.50
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2015 2016 2017 2018 2019
HICP Quarterly profile
NEIG Unprocessed Processed Rents Energy Core Services HICP Core HICP
#Budget19
Section 1 Macroeconomic Developments
Section 2 Macroeconomic Outlook
Section 3 Developments in the Public Finances
Budget 2019 Macroeconomic Outlook…
Year-on-year % change 2018 2019 2020 2021 2022 2023GDP 7.5 4.2 3.6 2.5 2.6 2.7GNP 5.9 3.9 3.3 2.3 2.4 2.5Nominal GDP 9.3 6.2 5.4 4.4 4.4 4.5
Personal Consumption 3.5 3.0 2.6 2.1 2.2 2.4Govt Consumption 3.5 2.9 1.9 1.8 1.8 1.8Investment -8.9 7.1 5.7 4.4 4.3 4.3Exports 7.0 5.6 4.8 3.8 3.7 3.6Imports 0.9 6.2 5.3 4.5 4.3 4.1
HICP 0.7 1.5 1.7 2.9 2.4 2.6GDP Deflator 1.8 1.9 1.8 1.8 1.7 1.7Employment 3.0 2.8 2.2 1.5 1.6 1.7Unemployment (rate) 5.8 5.2 5.0 5.0 5.0 5.0
Contributions to growth (p.p)*Domestic Demand -0.5 2.7 2.2 1.8 1.8 1.9Change in Stocks 0.5 0.0 0.0 0.0 0.0 0.0Net Exports 7.5 1.4 1.3 0.7 0.8 0.8
Modified Domestic Demand (incl stocks) 3.5 2.4 1.9 1.6 1.6 1.7Modified Net Exports 3.9 1.8 1.7 1.0 1.0 1.0
Risks - firmly tilted to the downside…
External
• Hard-Brexit
• Trade protectionism/trade-war
• Global financial market conditions
• Geopolitical factors
Domestic
• Concentrated production base
• Overheating pressures
#Budget19
Section 1 Macroeconomic Developments
Section 2 Macroeconomic Outlook
Section 3 Developments in the Public Finances
Tax performance year to date…
Key points
• Tax revenues of €37.5
billion were received to end
Q3 2018, marginally below
target (down 0.3% or €0.1
billion).
• In year-on-year terms, tax
revenues are up 5.3% or
€1.9 billion.
0
10
20
30
40
50
60
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
€b
illio
ns
Total Taxes 2018 receipts 2018 Profile
Budget 2019…
• The central fiscal assumption of Budget 2019 is that
Ireland will achieve a broadly (in headline, general
government terms) balanced budget of 0.0% of GDP
next year.
• This is the first time the balance has not been in deficit
in 12 years.
• The economic forecasts underpinning this Budget
have been endorsed by the Irish Fiscal Advisory
Council (IFAC).
Budget 2019 Fiscal Outlook…
2018 2019 2020 2021 2022 2023
general government balance (% of GDP)
-0.1 0.0 0.3 0.4 1.1 1.4
general government primary balance (% of GDP)1.5 1.4 1.6 1.6 2.3 2.7
Debt-to-GDP ratio
64.0 61.4 56.5 55.3 53.1 51.1
Debt-to-GNI* ratio
105.2 101.0 93.1 91.2 87.8 84.5
Structural Budget Balance (% of GDP)
-1.0 -0.7 0.0 0.2 1.0 1.4
General government balance…
Key points
• General government balance
of -0.1% of GDP forecast for
2018, improving to 0.0% of
GDP in 2019.
• A general government
surplus of 0.3 is forecast for
2020.
• This will be the first time the
general government balance
has been in surplus since
2007.
-12.8%
-8.1%
-6.1%
-3.6%
-1.9%
-0.5%-0.2% -0.1% 0.0%
0.3% 0.4%1.1%
1.4%
-14.0%
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
2011 2012 2013 2014 2015 2016 2017 2018f 2019f 2020f 2021f 2022f 2023f
% o
f G
DP
General government debt…
Key points
• General government debt of 64.0% of GDP forecast for 2018. This represents a 4.4 percentage point improvement on the end-2017 position. This compares to an expected 2.0 percentage point improvement at the time of the spring forecasts.
• This further improves to 61.4% of GDP in 2019.
• As a percentage of GNI* our debt ratio for 2018 is 105.2 improving by 4.2 percentage points to 101.0 in 2019.
0
20
40
60
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100
120
140
160
180
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17
General Government Debt to GDP and debt to GNI*
General Government Debt-to-GDP General Government Debt-to-GNI*
General government debt…
Key Points
• Debt interest payments as a percentage of total general government revenue is a useful way of assessing debt sustainability.
• As this measure is dependent on domestic revenue streams, it is less prone to distortion by the effects of globalisation on the Irish economy.
• Using this and alternate measures, such as debt-to-GNI* gives a more accurate read of Ireland’s level of indebtedness.
• Despite improvements the level of public debt in Ireland remains high by both historical and international standards.
• That is why it is crucial that we prioritise the reduction of this burden – a key factor in ensuring the continued stability of the public finances.
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Debt Interest to Revenue Ratio
Forecast
#Budget19
@IRLDeptFinance
www.finance.gov.ie
This presentation is for informational purposes only
No person should place reliance on the accuracy or completeness of
information which is contained in this document and which is stated to have
been obtained from or is based upon trade and statistical services or other third
party sources. Any data on past performance contained herein is no indication
as to future performances.
No representation is made as to the reasonableness of the assumptions made
within or the accuracy or completeness of any modelling, scenario analysis or
back-testing.
All opinions and estimates are given as of the date hereof and are subject to
change.
The information in this document is not intended to predict actual results and
no assurances are given with respect thereto.
