The recovery continues – regional GDP in 2013 and 2014.

How are Irish regions doing in this recovery phase after the economic crisis?  Dublin led the recovery, with growth picking up after 2010 and while the West showed early signs of growth, more recently there has been some stagnation.  Recently published CSO figures on regional GDP allow us to consider how the recovery has occurred among the regions since the economic collapse of 2008. It is particularly useful that estimates for 2014 have been provided along with the published 2013 figures.

Gross Value Added (GVA) [1] provides a measure of the output and the value creating performance and economic activity of each region and is an important statistic for comparison among regions within Ireland and internationally.

In 2013, GVA per person[2] in the West Region was €26,839.  This is a fall of 6.5% on 2012 (€28,698) and 2011 (€28,840).  The preliminary figure for 2014 shows some recovery on 2012 to €28,113 which is still lower than 2011.  Interestingly, the West had shown a rapid recovery from the economic crisis, while GVA declined in 2008 and 2009 it grew in 2010 and 2011, and declined again (slightly) in 2012 before a more significant fall to 2013.  There was some recovery in 2014.

Figure 1: GVA per person (basic prices)  in NUTS 3 Regions  2012-2014 Source: CSO, 2016, County Incomes and Regional GDP, Table 9 † Preliminary

Figure 1: GVA per person (basic prices) in NUTS 3 Regions 2012-2014
Source: CSO, 2016, County Incomes and Regional GDP, Table 9
† Preliminary

 

The Border Region has shown a somewhat steadier pattern of recovery.  GVA per person in 2010 was at its lowest (€21,846) in the last decade, a fall from €27,301 in 2007.  Since 2009 there has been a reasonably steady growth (though 2012 was less than 2011) with GVA in 2013 (€23,260) 11.1% higher than 2012 and preliminary figures for 2014 showed an 4.7% increase to €24,381.

Clare, one of the Western Region counties, is in the Mid West region.  That region had a GVA per person of €29,305 in 2013 (a 4.7% increase on 2012) and a preliminary figure of €30,695 for 2014.  This is still below the 2007 peak of €34,835.

In fact, the Dublin region (when considered alone and not with the Mid East) is the only region where the preliminary 2014 figure is higher than the peak GVA per person in 2007 (€58,211 vs €56,126).  None of the other regions have recovered to the 2007 level, though the difference in the West region is slight (and in 2012 GVA in the West was higher than that in 2007).

The changes in GVA in the regions since 2005 are shown in Figure 2, with the clear peak in all regions in 2007 and the varied pattern of growth in the different regions since then.

Figure 2: GVA per person (basic prices) in NUTS 3 Regions 2005-2014 Source: CSO, 2016, County Incomes and Regional GDP, Table 9, 2014 figures preliminary

Figure 2: GVA per person (basic prices) in NUTS 3 Regions 2005-2014
Source: CSO, 2016, County Incomes and Regional GDP, Table 9, 2014 figures preliminary

Differing growth patterns in the regions also gave rise to a widening of the disparities among the regions immediately after the crash.  This is most easily seen looking at the Indices of GVA per person from 2005 to 2014 with the State=100 shown in Figure 3 below.

Figure 3: Indices of GVA per person (basic prices)  in NUTS 3 Regions  2005-2014 (State =100) Source: CSO, 2016, County Incomes and Regional GDP, Table 10, 2014 figures preliminary

Figure 3: Indices of GVA per person (basic prices) in NUTS 3 Regions 2005-2014 (State =100)
Source: CSO, 2016, County Incomes and Regional GDP, Table 10, 2014 figures preliminary

In terms of the differences between the highest and lowest GVA per region there has been a widening of the disparity.  In 2005 there were 60.6 index points between the lowest GVA per person in a region (Midland, 65.4) and the highest (Dublin and the Mid East, 126.0).  In 2007, at the peak of the boom (for most regions) the difference was 59.2 (65.5 and 142.7 for the same regions), while in 2014 the difference between Midland (59.2) and Dublin and the Mid East, (130.6) was 71.4 index points (71.3 in 2013)[3].  This represents a narrowing of the gap since 2012 when the difference peaked at 72.3 index points.  The pattern is similar when differences between the NUTS2 regions (BMW and S&E) are examined.

But the difference between the regions with the highest and lowest GVA is a crude measure of widening of disparities and the Coefficients of Variation which indicate the level of variation in regional GVA among all the regions between 2005 and 2014 is more useful for comparison.

Figure 4 Coefficient of variation for GVA per person in NUTS 3 Regions 2005-2014 Source: CSO, 2016, County Incomes and Regional GDP, Table 9, WDC calculations, † Preliminary

Figure 4 Coefficient of variation for GVA per person in NUTS 3 Regions 2005-2014
Source: CSO, 2016, County Incomes and Regional GDP, Table 9, WDC calculations,
† Preliminary

 

Figure 4, which graphss the Coefficients of Variation also shows that although disparities widened from 2008 onward, and continued to do so to 2012, the newly published figures for 2013 and 2014 show a decrease, although the Coefficients of Variation for 2013 and 2014 remain higher than those during the period 2005-2009.

Conclusion

While there has been welcome growth in most regions in 2013 and all regions showing growth in the preliminary figures for 2014 the widening of disparities in GVA since 2008 are of concern, even though the improvement in 2013 and 2014 may indicate that some of this is related to a delay in recovery.  The differences in GVA growth among regions are partially the result of increased productivity and concentration in high value sectors in the wealthier regions. This underlines the importance of ensuring that there is a focus on regional development and a policy of investment in these sectors in all regions, so that the benefits of the recovery are felt by all and the disparities in regional GVA continue to narrow.

 

Helen McHenry

 

[1] GDP is Gross Domestic Product, GDP and GVA are the same concept i.e. they measure the value of the goods and services (or part thereof) which are produced within a region or country. GDP is valued at market prices and hence includes taxes charged and excludes the value of subsidies provided. GVA at basic prices on the other hand excludes product taxes and includes product subsidies. See background notes here.

[2] GVA at Basic Prices are used throughout this discussion.

[3] It should be remembered that although the Midland Region has consistently the lowest GVA per person, and Dublin and the Mid East the highest, the fact that GVA is measured where it is produced and the population is counted where people reside, means that those commuting from the Midland region of Dublin and the Mid East are contributing to the GVA of that region, while they form part of the denominator in the Midland region, so increasing the GVA of one and reducing that in the other.