GDP DATA: NATIONAL ACCOUNTS FOR FULL-YEAR 2016 and REVISED QUARTERLY DATA
9th March, 2017
Bottom line: Another upward revision, with strength across the board. The first full set of national accounts for the whole of 2016 show even stronger growth than the estimates published at year-end. The growth encompasses domestic spending by the private and public sectors, exceptionally strong investment and strength in both imports and exports.
- Gross Domestic Product (GDP) expanded by 4% in 2016, the best performance since 2013 (4.4%), and far above expectations at the beginning of last year.
- In per capita terms, GDP growth was 2% — given 2% population growth in 2016.
- The key driver of growth was once again private consumption, which posted a powerful 6.3% rise, compared to 4.3% in 2015.
- Government spending also contributed, with a rise of 3.8% (3.3% last year).
- However, the outstanding performance — and the greatest change over 2015 — was the 11.3% surge in investments.
- Within the overall category of investments, plant and equipment rose at a 12.8% pace, after two years of declines. Although the new Intel plant was a major contributory factor to this rise, so too were heavy purchases of vehicles, including trucks and buses.
- Residential construction, the other key component in investments, posted a gain of 8.6% in 2016, compared to only 2.2% in 2015.
- Exports of goods and services were up by 3% in 2016, after declining 4.3% in 2015. In the fourth quarter, the rate of expansion reached 11.1% on an annualised basis.
- Imports rose by 9.5%, after a slight fall in 2015 — so that net external activity was again a negative factor in GDP growth (import growth exceeded export growth).
- Detailed examination of the import data shows that the key factor behind the rise was the tremendous surge in vehicle purchases, by both businesses and households.