Irish GDP on course for over 15% growth in 2021

The Irish economy grew by 0.9% in the third quarter and the annual change in GDP slowing sharply to 11.4% from 21% in q2, with the surge in growth as the economy re-opened in the the third quarter of last year dropping out of the annual comparison. Barring a dramatic fall in the final quarter and any significant data revisions, GDP growth looks on course to average just over 15% for 2021 as a whole.

Consumer spending had risen sharply in the second quarter, by 14.5%, but slowed in q3, increasing by just 0.5%, with building and construction also slowing, growing by 2% after a 19% rise in q2. Exports all lost momentum increasing by 1.3% in the quarter, with merchandise exports actually falling modestly, a rare occurrence.

Looking at the annual changes in q3, it is clearer that exports are the GDP driver, rising by 18%, with off-shore manufacturing a significant factor. Consumer spending is up by 7.7%, while the growth in Government consumption has slowed to 3.4%. Building and Construction is down 5.7%, with overall capital formation also lower, at 4.6%. Net outflows of profit and interest was down somewhat compared to the previous year, and as a result GNP, which adjusts for such flows, rose by an annual 20%.

The Irish authorities tend to downplay GDP as the most appropriate indicator of Irish economy activity but other indicators all point to very strong growth this year, despite the pandemic effects; tax receipts in November were 21.8% ahead of the same period last year, employment grew by an annual 220,000 in the third quarter, unemployment is back down to 5.2% while the vacancy rate is at a record high of 1.5%. One blot is the spike in inflation, which may hit 5.5% for November, albeit peaking there.

The performance of the economy has also transformed the fiscal situation, prompting the Government to revise down the expected deficit this year on a number of occasions, the most recent being in early October, with a revised borrowing requirement of €12.1bn. However, the figure to end-November was below €1.5bn so the full-year out turn may well be €4-€5bn. That would imply a similar increase in the national debt but in the event the NTMA have massively over-funded, by €18bn year to date, raising the debt figure substantially.

7.8% increase in Irish GDP shatters consensus forecasts

Another big surprise in the Irish national accounts, with GDP expanding by 7.8% in the first quarter of 2021. The more timely data on retail sales , credit card spend and construction implied a sharp fall in domestic spending in q1 but industrial production had grown strongly, pointing to robust export growth. In the event the latter proved the more significant, at 5.8%, so dwarfing falls in the domestic spending components. The quarterly surge allied to a positive base effect (GDP fell 3.9% in the first quarter of 2020) propelled annual GDP growth to 11.8%, not only shattering estimates for the quarter but also rendering redundant consensus estimates for the full year.

The export surge (the annual increase was 18%) owed much to an 68% rise in contract manufacturing, which are goods manufactured offshore but owned by Irish based firms. Most of that production is presumed to be in China so the strong re-opening of that economy may be reflected in these numbers.

Consumer spending did fall, by 5.1%, taking the annual decline to some 12%, although a rebound to a positive figure is likely in q2, while Government spending is still supportive, rising an annual 13.4%, albeit only 1% in the quarter.Building and Construction fell an annual 19% with big declines in investment in machinery and Intangibles resulting in a 63% plunge in overall spending on capital formation.

Most of the spending on Intangibles is also captured as a service import, and that duly fell ,as did the import of goods, given the fall in consumption- imports in total declined an annual 25%. The export performance also led to unusually large profit outflows, so reducing the annual growth in GNP, which adjust for international profit and interest flows, to 2.9%.

Domestic demand overall fell by an annual 39%, but the CSO estimates that the decline in modified domestic demand was 5.8% This adjusts for the impact of aircraft leasing on investment in machinery and equipment as well as removing the impact of multinational spending on Intangibles, although of course also ignoring all exports from whatever the source.

These GDP figures again illustrate the dual nature of the Irish economy, with exports dominating domestic demand in total economic production. Moreover exports do not conform to the cyclical pattern used in most economic models., and are more akin to the performance one sees in secular growth stocks.

The Irish economy grew by 3.4% in 2020, outpacing China.

Ireland appears to have been the only country in the Euro Area to record economic growth last year, with real GDP rising by 3.4%., which also means it outpaced China (2.3%). Nominal GDP is now €366bn, and it has actually doubled in seven years. The 35% rise recorded in 2015 plays a significant part of course but excluding that year the average rise in nominal GDP since 2013 is 7.2% and 6.2% in real terms, a remarkable performance.

Growth in 2020 was achieved despite big Lockdown related falls in domestic demand, including a 9% decline in consumer spending and a 10% fall in building and construction. The contraction in investment spending on machinery and equipment was larger, at 25%, while the decline in Intangibles (R&D and Intellectual Property ) was 35%, bringing the total fall in investment spending to 32%.

Government spending rose substantially, including large transfers to support household and businesses, and the increase in Government consumption in the national accounts was 10%. However, the Government component in GDP is so small now that the net impact on growth in 2020 was less than 1%. The main reason the Irish economy grew last year was the performance of the export sector, which due to its composition (chemicals, pharma, and ICT) performed very well despite the pandemic, rising by 6.2% in volume terms , with all of the growth coming in terms of merchandise exports.The corollary to that export gain was higher multinational profits but overall factor outflows actually fell, albeit offset by a larger fall in investment income inflows , leading to a big rise in net outflows. Consequently GNP growth was much weaker than GDP, at 0.6%.

The 2020 growth figure was achieved despite a large seasonally adjusted 5.1% fall in GDP in the final quarter, although the component breakdown is a little odd, in that exports grew by over 4%, but that was outstripped by a 24% increase in imports. The latter is subtracted from the GDP measure but looks high relative to the consumption and capital formation figures and we would not be surprised if the Q4 figure is not revised upward.

Absent that revision the big fall in the final quarter left the annual change in GDP in q4 at just 1.5%, a much lower carryover effect than we anticipated. Growth in GDP over the first half of 2021 will be flattered by positive base effects but the economy is now entering the year with far less momentum which allied to the Lockdown over q1 has negative implications for the 2021 growth figure as a whole..

Irish economy again confounds, up 11.1% in q3

We have noted on other occasions that the Irish economy, as measured by GDP, behaves more like a secular growth stock than the cyclical entity forecasters generally assume, reflecting the strength and composition of the multinational export sector , driven as it is by ICT, Pharma and medical devices. The widely expected external trade downturn never materialised, which also raises questions about the forecast impact of Brexit on the export sector and hence the broader economy.

Exports rose by 5.7% in volume terms in the third quarter, which alone would have boosted GDP by 7.4%. Growth wa stronger still, however, as domestic spending benefitted from the re-opening of the service sector over the summer months. Consumer spending had fallen by 19% in q2 but jumped by 21% in q3, adding over 5 percentage points to overall GDP, while building and construction also soared, by 40%, although Government consumption was flat after rising by over 9% during the Lockdown in q2.

Spending on machinery and equipment also rebounded strongly in the quarter although multinational investment in R&D, by far the largest component of investment, rose only modestly, so reducing the growth in total capital formation to 4%. That also dampened imports, which rose by 1.5%.

The reported decline in GDP in the second quarter was revised to -3.2% from -6.1%, and the blow-out q3 figures left the annual change in GDP at 8.1%, despite the fact that investment and consumer spending are still down on last year. That’s plus 8.1%, with the average annual growth over the three quarters of 2020 at 3.6%, so absent an enormous fall in the final quarter growth is likely to be positive for the year as a whole. A better gauge of the income of Irish residents is GNP, which adjusts for net profit outflows, and the average annual change over the first three quarters is only marginally positive, albeit still a much better performance that the EU norm.

Irish GDP falls 6.1% in q2 but consensus for 2020 will be revised up.

Irish GDP contracted in q2, as universally expected, but the 6.1% quarterly fall was not as severe as many predicted, although the first quarter is now also seen to have contracted, by 2.1%, instead of the initial 1.2% rise. On an annual basis GDP fell by 3.0% in q2 but this followed a 5.7% rise in the first quarter, leaving the average annual change over the first half of the year in positive territory, at 1.4%. The economy probably grew again in q3 and forecasts of contractions in the 8%-10% range over the full year now look far too pessimistic, with the consensus likely to move higher. Indeed our own forecast of -3.5% looks a tad low and we will revisit the forecast again, although with the caveat that the path of the virus remains the key uncertainty.

We have consistently emphasisied that Ireland’s GDP is largely dependent on exports and that the composition of that sector ( heavily weighted to Pharma, medical devices, organic chemicals and ICT) renders it far more resilient than both domestic spending and the export sector in most other developed economies. Consequently , although exports did fall in q2, the decline was modest compared to the trend elsewhere and left the annual change at zero, following a 6.5% rise in q1, which means that the substantial annual fall in exports envisaged by most forecasters is unlikely to materialise.

The Lockdown did have a significant impact on domestic spending of course, with personal consumption plunging by some 20% in the quarter, taking the annual fall to 22%. Spending on Building and Construction also collapsed, by an annual 35%, with a similar fall in residential construction. The other components of investment ( spending on machinery and equipment plus intangibles) also fell precipitously, by 75%, leaving total capital formation 71% below its level a year earlier. The only spending component of domestic demand to grow was government consumption, with an annual increase of 12%, a big acceleration from the 3% recorded in the first quarter.

The plunge in domestic demand was also reflected in Irish imports, with an annual fall of 37% in the second quarter. Imports are strongly affected by the capital spend from multinantionals, with most of the Intangibles component captured as a service import and as such GDP neutral, although adding huge volatility to the investment and domestic demand figures as well as the balance of payments.

The overall picture them is one in which domestic spending plummeted as a result of the pandemic and the lockdown but with an offset fom the export sector. The latter is what differentiates Ireland from its EU peers and is likely to ensure that the GDP fall here is much less severe than elsewhere, if indeed it falls at all.

Irish Unemployment: 131,000 or over 1 million?

Unemployment in Ireland is officially measured in the quarterly Labour Force Survey(LFS), based on a sample of households, and the numbers in that category have to be both available for work and to be actively seeking it. The Survey also captures total employment, with the sum of those in work and unemployed defined as the labour force.

Prior to the Covid Pandemic and Economic Lockdown the unemployment figure had fallen to a 115,000-120,000 range, with the unemployment rate hitting a cycle low of 4.7% in late 2019. The first quarter of 2020 saw a modest tick up, to 123,000 , and an unemployment rate of 5%, with the universal belief that the following months would see a massive spike , a view reflected in most economic forecasts, which envisaged average unemployment rates of 15%-20% over the year.

The CSO issues a monthly estimate of unemployment, which is often revised based on the LFS when published, and it was a surprise to many that the increase in April and May was very modest ( a rise to 138,000) followed by a fall in June, to 131,000, with the unemployment rate easing back to 5.3% from 5.6%. On the face of it then, these figures are wildly at odds with consensus forecasts.

The CSO does provide an alternative measure, which takes account of those in receipt of the Pandemic Unemployment Payment, and that figure rose to a peak of around 600,000 in early May. However, those recipients do not meet the definition of unemployed as per the LFS so are not captured in the official figure. One option is to assume all are in fact unemployed ( which is unlikely to be the case)and so adding them to the official figure. The CSO use that approach to give an ‘upper bound’ for unemployment , resulting in a total of 695,000 in April and an unemployment rate of 28%.

The numbers in receipt of the PUP have fallen steadily over the past two months, as Lockdown eased, so the upper bound unemployment total in June had fallen to 560,000, with an unemployment rate of 22.5%. Two competing forces will impact that figure from here- the PUP figure will continue to fall as the economy re-opens but some firms wil either not emerge from Lockdown or do so with a reduced workforce, so boosting the official unemployment total.

The Live Register adds an additonal twist . This measures those claiming unemployment Benefit and Assistance and although not the official measure of unemployment ( the cycle low there was 182,000) the trend is used by the CSO to estimate the monthly unemployment figure . Again the Register picked up sharply in April and May ( to 226,000) but fell back again in June, to 221,000. When the PUP figure is added that total rises to 660,000, None of these figures take acount of those on a Wage subsidy scheme , numbering 382,000 in June, so if they are also added we arrrive at a grand total 1,041,822, with a peak of over 1,250,000 in April.

It is highly unlikely that everyone on a wage subsidy and in receipt of the PUP will end up unemployed so the 1 million figure is hopefully not reflective of things to come. At the other end of the scale it is not plausible that all will resume employment as before, so the official unemployment data may well start to tick up over the second half of the year. Nonetheless, estimates of the official unemployment rate for the year now look far too high , and it also may well be the case that unemployment on that definition will keep rising well into 2021, which again is contrary to the consensus .

Ireland only Euro economy to grow in first quarter.

Most developed economies saw contractions in the first quarter, with the Euro Area (EA) decline at 3.8%. A fall in Irish GDP was also widely expected ( the Department of Finance projected -5.0%), reflecting the lockdown which began in March, although the most recent data had shown quarterly  growth in industrial production,  a substantial gain in employment and  very strong performance from merchandise exports, driven by pharmaceuticals and medical devices. In the event Ireland appears unique in  the EA during the early phase of the Covid pandemic as the only country to record GDP growth, with output rsing by 1.2%. This  left the annual change in GDP at 4.6%,  and although it does not mean that the average figure for the year will also be positive ( the q2 decline in domestic demand is likely to be large) , it does reduce the possibility of a double digit decline, as seen by some forecasters.

In truth a wide range of outcomes is possible given that exports account for 130% of GDP, so dwarfing any impact from consumer spending or domestic investment. The type of  exports produced here by multinationals ( chemicals, pharma, business and computer services) does render them more resilient in the type of lockdown seen globally as a result of the pandemic, although contract or offshore manufacturing (largely in China) adds an additional degree of uncertainty to the export outlook. Indeed, the latter fell in the first quarter so reducing mechandise export growth to an annual 4% from the 12% recorded dometically. Service exports grew by over 10% and the volume growth for exports overall was 5.9% in annual terms, which clearly provides a massive boost to total GDP.

Imports must be captured as domestic demand or as an input into exports and so have no net impact on GDP. In the first quarter merchandise imports were flat but service imports rose by 69%,  driven  by  a very large increase in  the import of intellectual property, by a small number of firms. The corollary was a very strong increase in investment in Intangibles, and the CSO did not provide a figure for this or for spending on mechinery and equipment. We know that overall investment spending rose by 197% to €46bn, and that construction increased by over 8% to €5.6bn, leaving a residual of   over €40bn for Machinery, Equipment and Intangibles , and an annual rise of  286%.

Retail spending fell by 5.5% in the quarter, weighed down by a collapse in car sales,  and so a hefty fall in consumer spending was likely and duly emerged, with a 4.7% decline, taking the annual change also into negative territory at -2.5%. Consumption now accounts for less than a third of GDP however, and so even a fall of that magnitude was not sufficient to generate a negative print for GDP, although modified domestic demand, the CSO’s measure of domestic spending excluding the impact of multinationals on investment, did fall by an annual basis. by 1.2%.

The second quarter may well be different in that the fall in consumption and domestic demand is likely to prove strong enough to override  exports  and a double digit decline in GDP is widely expected , both for Ireland and across the EA. That may be the case  but an offseting factor here  may be a recovery in contract manufacturing exports from China. To reiterate; exports are key.


Fiscal support is from taxpayers, not helicopters

The economic impact from  Covid-19 has already been unprecedented in its severity and speed, prompting governments across the globe to offer  extraordinary levels of fiscal support to ameliorate the impact on households and businesses. As a consequence budget deficits will soar, raising the question of how they will be funded. The fact that some of the additional government spending has come in the form of cash payments to households or direct wage support has prompted references to ‘Helicopter money’, although that is to misunderstand the concept and indeed how these deficits will be funded,which as it stands will be from existing and future tax payers  albeit with the caveat that central bank actions can reduce the interest bill.

The term ‘Helicopter money’ was coined in 1969 by Milton Friedman, musing on the impact of  a one-off increase in the money supply, in this case via the drop of €1,000 dollar bills from the sky (it would simpy raise prices he thought). More recently the idea re-emerged  in the noughties as central banks started to worry about deflation and  has also become associated with Modern Monetary Theory or as some call it, the ‘Magic Money Tree’. This contends that money is essentially a fiscal creation and that a government with monetary sovereignty, such as the US or UK,  can fund additional spending by printing money rather than through taxes, albeit in the modern world through the central bank simply crediting a balance in the State’s account at the bank. Note that euro member states do not have monetary sovereignty and the ECB is prohibited from monetary financing.

What is striking  though is that,to date at least, the huge sums that governments have committed to spend are seen to be funded by borrowing. The partial payment of wages by the State, for example, is no different from the payment to recipients of unemployment or other social welfare i.e. it is  a transfer from tax payers, paid out of current tax receipts or from future tax receipts by borrowing.

Consequently, Government debt levels will rise steeply, as in many cases deficit ratios  will balloon to double digit levels, although that depends on the duration and  severity of the recession unfolding before us.  In Ireland’s case the Central Bank (CB) has  recently projected an Exchequer  deficit around €20bn this year, which if broadly right implies a major increase in debt issuance. That had been put at up to €14bn, against €19bn due for redemption because  the NTMA had intended to run down some of its cash balances which amounted to €15bn at the beginning of the year. The implication now  is that a €10bn reduction in cash balances would still require around €30bn in issuance of new debt.

The NTMA have already issued €11bn to date and of course the interest rate on the debt is very low, albeit higher than it was a few months ago, so debt is being redeemed and replaced at a much lower cost, reducing the average interest rate on the outstanding debt, which is now down around 2%. QE is helping of course, which allows the ECB and the (CB) to buy up to a third of any issuance and hold up to a third of debt issued. That means that most of the interest on that QE debt is paid to the CB , boosting its income and hence largely returned to the Exchequer as CB profit.

This is not helicopter money as the bonds at issue will have to be repaid, most likley by  issuing new debt on redemption, which implies QE will be never ending unless economies are strong enough for private investors to buy all of the new debt issued. There is also an additional contraint on QE in the euro area  in that bond buying is broadly proportionate to each member’s population and GDP, which determines the ‘Capital Key’ ( share of the ECB’s capital subscription). In Ireland’s case it is around 1.5%, so Irish government bonds held under QE amount to €34bn out of a total of €2261bn .

The Covid pandemic and resulting economic crisis has prompted the ECB’s new Pandemic Emergency Purchase Programme  (PEPP)  which does  appear to include the capital key constraint but not the issue limit. It is designed to run this year with a size of €750bn  and therefore in theory could buy most or all of a new bond. Ireland might  issue €15bn in a  30 year pandemic bond, for example,   and the ECB could buy say €12bn, with most of the interest therefore paid to the CB. All this helps to reduce interest costs but is not the same as printing money to give to individuals, via bank transfer or from a helicopter.

V, U or L

The Covid -19 pandemic has taken many lives and threatens many more, prompting an unprecedented policy response across the globe , generally intended to slow the spread of the virus and ‘flatten out the curve’ by reducing the risk of a short term spike in hospitalisations overwhelming the health system. Many economies, although not all,  are in various forms of lockdown and the economic impact will be severe, to an extent impossible to quantify with any degree of certainty, although in some cases data is now emerging which allows economists to make a stab at the impact.

Crucially though, a question which cannot be answered at this stage is how long the hit to economic activity will last. Stock markets have plummeted but the scale of the fall to date implies that investors are betting on a V shaped  recession i.e. a very sharp fall in activity for a couple of quarters, followed by a rapid recovery at least approaching  pre-crisis levels.That also seems to be the consensus view in terms of US analysts, with Goldman Sachs, for example, projecting a 1.5% fall in GDP in the first quarter, followed by a 6% decline in q2 and then a 3% rise in q3 and q4 . That leaves the average fall in  US GDP in 2020 at -3.8%, with a projected rise in the unemployment rate to around 9% from the current 3.6%.

The same  V pattern appears to be underpinning  expectations in the Euro Area (EA), although again the fall in annual GDP is huge. Germany. for example, appears to be  predicating its fiscal response to the crisis on a 5% fall in GDP. The March PMI for the EA (31.4) does provide sime guidance, with the average for the first quarter implying a 0.7% decline in  q1 GDP, followed by  around 2.7% in q2 if the PMI figure averages around 30  over the next few months. A 0.5% decline in q3 followed by a 1.5% bounce in q4 would leave the average fall in  EA GDP in 2020  at 2.5%.

In Ireland’ case the PMI indices do not correlate highly with recorded GDP but in any case we do not have a March reading anyway  so  we have little to go on in estimating the economic impact of the virus on the economy. Assuming a V shaped recession, however, with  heroic assumptions on the scale of very steep falls in non-food domestic spending till June,  yields a €10bn (9% )drop in consumption and a €15bn (8%) drop in modified domestic demand in 2020, assumimg a modest recovery in the latter part of the year.A similar  percentage fall in private sector employment would  push the average unemployment rate up to 12%. The impact on overall GDP largely depends on exports, however, including contract manufacturing, which amounts to some €70bn, with most originating in China. A collapse in that figure could throw up an enormous fall in recorded GDP but again if we assume that V shape for exports as a whole the overall fall in  fall in GDP is around 5%, which would be less than half the slump recorded during the financial crash because it would be short and sharp rather than over two years.

How long the recessions will last depends on the path of the virus and how quickly activity returns to ‘normal’ which are unknowns of course. So a U shaped cycle is certainly possible, with any material recovery in spending and output pushed out from two to say four quarters. That would clearly render the above estimates  very optimistic and pose big choices for governments in terms of fiscal supports designed to be short-lived.

Finally, there is also the prospect that the virus takes much longer to pass through the population and that the return to ‘normal’ patterns of social and economic activity does not occur for  a prolonged period, giving an L shaped cycle i.e. any upturn takes well  over a year to eighteen months to materialise. Clearly that would result in much steeper falls in  equity markets than seen to date, much larger increases in unemployment, massive credit issues and much larger fiscal hits to governments. Of course we have seen unprecedented levels of policy response on the monetary side, designed to pump liquidity into the system and limit the scale of any rise in long term borrowing cost for governments. Media headlines have also highlighted huge fiscal ‘stimulus’ packages but to date most of this relates to State guarantees for bank loans, which may carry fiscal  implications down the line but is effectively monetary in seeking to supply credit to the business sector. Nonetheless, we have also seen governments now also turning to more direct measures , including enhanced unemployment assistance and in some cases, including Ireland, wage support. As yet these massive increases in fiscal deficits are seen to be financed by borrowing rather than money creation, albeit with the resumption of QE in many cases meaning that  the private sector will not be alone in buying the debt.

Irish GDP grew by 5.5% in 2019 but consumer spending surprisingly weak.

Irish real GDP grew by 5.5% in 2019, a slowdown from the 8.2% recorded the previous year. The nominal value of GDP rose by 7.2% and now stands at €347bn, which is double the level seen in 2012, a surge which has precipitated a huge fall in the Government debt ratio, which probably ended 2019 at 58.6% and hence  below the 60% limit as set out in the EU’s Stability and Growth pact.

The growth outcome was actually  below consensus expectations ( the Central Bank expected 6.1% and the Department of Finance 6.3%) despite a strong 1.8% increase in the final quarter and this was in part due to downward revisons to growth in the earlier part of the year. This included consumer spending, which is now seen to have risen by only 2.8% in 2019 , with the annual change slowing sharply to only 2.0% in the final quarter. Given booming employment and  stronger wage growth the implication is that precautionary savings rose, as also indicated by the growth in household bank deposits. In contrast, Government consumption was revised up and grew by 5.6%, or double that of personal consumption, a rare combination.

In terms of the other components of domestc demand , building and construction grew by 6.8% in 2019, with housebuilding up 18%, but the pace of expansion is slowing, as might be expected given the small starting base of completions. Spending on housing improvements surprisingly fell but spending on non-residential building continued to grow, by 9%. The prevailing uncertainty about Brexit last year also impacted spending by domestic firms on machinery and equipment, which fell by 15%, with the result that what the CSO deem modified capital formation (total investment excluding the impact of multinationals on various components) rose by just 1.3%, which with the sluggish increase in consumer spending meant that modified domestic demand grew by just 3%  from 4.7% in 2018.

That concept is a CSO  construct and the actual GDP  figure as recognised internationally includes all spending on investment, including aircraft leasing and that undertaken by multinationals on R&D (captured as Intangibles), which can be both enormous and extremely volatile relative to the small scale of the underlying Irish economy. In 2019 Intangibles alone rose by over €70bn, or  270% with the result that overall capital formation increased by an extraordinary 94% having fallen by 21% the previous year.On the face of then, Capital Formation now accounts for over 40% of Irish GDP, with consumer spending less than a third, an unusual if not unique configuration.

That Intangibles figure is broadly neutral for GDP  however, as virtually all of it  is captured as a service import , so total imports rose very strongly in 2019, by 35%. Exports continued to perform strongly , rising by over 11%, so massively outperforming the growth in global trade, but the result was a large Balance of Payments deficit of €33bn or 9.5% of GDP. Normally a large deficit like that would imply problems, in that  the  economy is consuming more than it is producing but in Ireland’s case is a useless indicator.

The  economy finished the year strongly according to the GDP data, despite the weak consumer, with the quarterly increase of 1.8% bringing the annual change in q4 to 6.2%. This therfore provides a strong positive carryover into 2020 but there are fresh risks alongside the ongoing possibility of a no-deal Brexit. One is political (it is still unclear if a governmnet will be formed or that an election will be required) but the most pressing now is the economic impact of  COVID-19. That may be domestic ( reduced consumer spending and a supply side hit to output across all sectors) , external ( a global recession ) and/or company specific. The latter tends to be overlooked, but the impact of contract manufacturing on Irish exports is substantial; total merchandise exports in 2019 amounted to €227bn, against €144bn actually shipped from Ireland, with the difference largely deemed to be accounted for by production in China. On that basis the first quarter export figure could be a shock.