Weekly Market Insight

Latest Economic & Market Update 5th March 2021

05th March 2021

Good afternoon, it is March 5th 2021 and here is your economic and market update from BlackBee. 

Today’s focus:

  • CSO release preliminary figures for 2020 GDP.
  • Paschal Donohoe address to ERSI.

According to preliminary figures released from the CSO today, Ireland’s GDP grew by 3.4% in 2020. Ireland was the only eurozone economy to grow last year. Although GDP figures show that Irelands economy grew in 2020, this was significantly influenced by globalised sectors with Industry increasing by 15.2% and the Information & Communication sector increasing by 14.3% during 2020. Multinational sector growth was 18.2% and these sectors accounted for 50% of total value added in the economy in 2020 compared to 43.4% in 2019. Sectors focused on the domestic market suffered significantly lower levels of economic activity. Distribution, Transport, Hotels & Restaurants contracted by 16.7% and Construction decreased by 12.7%. Regarding expenditure in the economy, Government spending on goods and services increased by 9.8% in 2020, while personal spending on goods and services decreased by 9% with significant changes visible as the levels of restrictions changed. It can be argued that GDP does not tell the full picture of what is happening in the Irish economy. To get a better insight, Modified Domestic Demand would be a good indicator and this decreased by 5.4% in 2020. (Source: CSO.ie)

Minister for Finance Paschal Donohoe warned that the States large national debt leaves it exposed to a future upturn in interest rates and that the current budget deficit which stands at €14 bn will need to be brought down once the crisis abates. Mr Donohoe said that the government would not withdraw Covid-related supports too soon as it would damage recovery but also declined to indicate if the reduction of the budget deficit would mean tax increases. The interest bill on the debt remains extremely low however Mr Donohoe said that this would not always be the case and that there were already signs of a pick-up of inflation which tend to be accompanied by higher interest rates. (Source: Irish Times). Although there are signs on inflation picking up this may be temporary and remain well below the 2% target rate for some time similar to after the last financial crisis.

Best & Worst Performers of Large Cap US Stocks on Thursday
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Global Market Update
(as at close of markets 04/03/2021)