Ireland Overview. November Global Markets

Transcription

1 Ireland Overview November 213 Global Markets

2 Produced by the Bank of Ireland Economic Research Unit (ERU) Further reduction of Governm

3 Contents Section One Macroeconomic data analysis 2 1a. Irish economy 3 1b. Global economies Section Two Ireland on course to exit Troika programme 6 2a. Government finances continuing to improve 7 2b. Ireland ready to emerge from bailout 8 Section Three Irish economy showing positive signs 9 3a. Economy returns to growth 1 3b. Domestic demand picking up 11 3c. Labour market recovery gains pace 12 3d. Property market improvement continues 13 3e. Exports stage recovery after muted start to year 1 ent deficit forecast

4 Section One Macroeconomic data analysis

5 1a. Irish economy GDP overview economy returns to growth (annual volume change) (e) 214(f) GDP Q1 (q-o-q) - Q2 (q-o-q) - Q3 (q-o-q) - Q4 (q-o-q) Reuters consensus forecast 1.7 Irish Government forecast.2 2 EU forecast GNP External sector renewed vigour (e) 214(f) Annual exports (bn) Real export growth (annual volume change) Annual imports (bn) Real import growth (annual volume change) Total exports/imports as a of GDP Merchandise/services export split 1/49 49/1 49/1 48/2 EUR/GBP average for year Competitiveness Irish unit labour costs (annual change) Balance of Payments (m) 2,2 7,2 9, 9, Consumption/investment encouraging signs of growth (e) 214(f) Personal consumption (annual volume change) Retail sales (annual volume change) Total investment (annual volume change) - Buildings & construction (annual volume change) - Machinery & equipment (annual volume change) House completions (number of housing units) 1,48 8,488 8,1 9, Labour market recovery gaining momentum (e) 214(f) Total labour force (s) 2,166 2,14 2,162 2,177 Total employment (s) 1,849 1,838 1,87 1,898 Unemployment ( of labour force) Inflation price pressures have eased (e) 214(f) CPI (annual average change) HICP (annual average change) Government finances improvement continues (e) 214(f) General Government Balance ( of GDP) Primary Balance ( of GDP) Exchequer Balance (m) --24, , ,3 --9,9 Exchequer Balance ( of GDP) Tax revenue (m) 34,27 736,64 737,82-4,4 change in tax revenue Gross public spending (m) 64,224 76,624 7,79 73,3 General Government Debt ( of GDP) Source: CSO, Irish Department of Finance, EU Commission and Bloomberg. Forecasts by Bank of Ireland ERU unless stated. All Government finances forecasts by Irish Department of Finance. 3

6 Section One (cont.) Macroeconomic data analysis

7 1b. Global economies Global pace of growth to pickup in 214 Nominal GDP ($bn Purchasing Power Parity (PPP)) GDP (real change) (e) 214(f) 79,346 83,193 86,699 91, Euro Area recovery taking hold Nominal GDP ($bn PPP) GDP (real change) Unemployment rate Inflation Balance of Payments ( of GDP) Exports (real change) Consumer spending (real change) (e) 214(f) 11, , , , (e) 214(f) 3, , , , (e) 214(f) 1, , , , (e) 214(f) 2, , , , Germany growth outlook improving Nominal GDP ($bn PPP) GDP (real change) Unemployment rate Inflation Balance of Payments ( of GDP) Exports (real change) Consumer spending (real change) Spain recession continues Nominal GDP ($bn PPP) GDP (real change) Unemployment rate Inflation Balance of Payments ( of GDP) Exports (real change) Consumer spending (real change) UK outperforming expectations Nominal GDP ($bn PPP) GDP (real change) Unemployment rate Inflation Balance of Payments ( of GDP) Exports (real change) Consumer spending (real change) USA growth accelerating Nominal GDP ($bn PPP) GDP (real change) Unemployment rate Inflation Balance of Payments ( of GDP) Exports (real change) Consumer spending (real change) (e) 214(f) 1, , , , (e) 214(f) , , , , China slowdown worries dissipating Nominal GDP ($bn PPP) GDP (real change) Unemployment rate Inflation Balance of Payments ( of GDP) Exports (real change) Source: IMF, OECD

8 Section Two Ireland on course to exit Troika programme

9 2a. Government finances continuing to improve The Irish Government is projected to beat its Troika deficit targets in 213 and 214, notwithstanding a slight easing in the austerity planned in 214. The General Government Deficit for 213 is estimated to be e12.1bn, em below the original Budget target. This equates to 7.3 of GDP, within the Troika target of 7. of GDP The Government should achieve its Deficit target in 213 despite lower than originally forecast nominal GDP (e166bn versus a Budget projection of e168bn) and weaker than expected real GDP growth (.2 versus 1. Budget forecast) Tax revenues for the year to date are broadly on target. The Government expects total tax revenue for 213 to come in slightly under target due to weakness in spending taxes such as VAT and excise, compensated somewhat by overperformance in corporation and property taxes The Exchequer s cash deficit in 213, at a projected e11.3bn, is significantly below the original Budget target of e1.4bn, primarily due to one off factors (sale of BOI CoCo, Irish Life and Promissory Note deal) The General Government Deficit for 214 is forecast to be e8.2bn or 4.8 of GDP, under the Troika target of.1 of GDP The Government s Primary Balance (Deficit ex interest costs) is expected to record a very modest surplus of e2m in 214, the first primary surplus since 27. The Primary Balance is forecast to increase to nearly ebn or 2.6 of GDP by 216 To achieve a 4.8 General Government Deficit in 214 the Government announced a further e2.bn in spending reductions and tax increases in Budget 214 The tax and spending component of this Budget was lower than the e3.1bn adjustment that was previously planned. The actual e2.bn adjustment incorporates e1.6bn in expenditure reductions and e.9bn in revenue raising measures Graph shows: General Government Balance and Primary Balance (General Government Balance excluding debt interest as a percentage of nominal GDP) Source: Eurostat, Irish Department of Finance Government financial position improving (e) 214(f) 21(f) 216(f) n General Government Balance Primary Balance Public finances continue towards sustainability (e) 214(f) 21(f) Taxes Current Spending Graph shows: Annual change in tax revenues and net voted current spending Source: Irish Department of Finance Significant adjustment in public finances undertaken of GDP The Government announced some stimulus measures including the retention of the 9 VAT rate in the tourism and hospitality sector, and the removal of the air travel tax. There are also a small number of incentives aimed at re-energising the construction sector Demonstrating the progress made in Government finances over recent years, c.9 of total adjustments required to correct public finance imbalances have now been implemented or announced. A final adjustment of c.e2bn will be required in 21 to bring the Deficit below the EU treaty limit of n Fiscal consolidation ( of GDP) Graph shows: Fiscal consolidation in GDP terms, annual and cumulative Source: NTMA (f) Cumulative total of consolidation ( of GDP) (rhs) 7

10 2b. Ireland ready to emerge from bailout Ireland is to become the first country to emerge from its Troika programme, exiting on schedule at the end of 213. Ireland has consistently met the targets set out by the Troika in every quarterly review since the enactment of the programme in 21 The country has implemented structural reforms across the economy in the areas of public finances, banking and professional services among others The progress Ireland has made in correcting its public finances and implementing the Troika programme has helped to push yields on Irish debt significantly lower e bn State funding requirements into 21 covered Q3 213 Q n Cash n Remaining Troika Loans n Bond Redemptions n Troika Loan Redemptions n Exchequer Deficit Graph shows: Ireland s funding requirements to 22 Source: NTMA, Department of Finance, exchequer deficit forecasts by BoI ERU. Correct as of October 213 Ireland successfully regained bond market access in 212. In 213 the NTMA raised e7.bn in longer term funding, including a new 1-year benchmark bond and has also fully re-engaged in the short term Treasury bill market, holding regular auctions 2 1 Significant tightening in Irish Sovereign bond yields At the end of 213, the NTMA is projected to have cash balances of c.e22bn. This will cover the State s funding requirement of e16.bn in 214, consisting of an Exchequer Deficit of e9.6bn and bond redemptions of e7bn The Government is reviewing the merits of obtaining a precautionary credit line from the Troika upon exit of the programme. A credit facility or backstop is not unusual when countries exit IMF programmes 1 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Graph shows: Generic year yields Source: Bloomberg Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 Apr 13 Irish -yr Spanish -yr Belgium -yr May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Ireland may also be considered for inclusion in the ECB OMT programme, when it returns to the bond markets again in Government Debt to GDP ratio to decline after 213 A return to sustained GDP growth, smaller deficits and the NTMA running down its cash balances to more normalised levels means that, while nominal debt will increase modestly in the coming years, 213 is forecast to be the peak in terms of the debt/gdp ratio (124), with the ratio forecast to fall to 12 in 214 and to under 11 in 216 While the public finances are being put on a sustainable path, Ireland s debt remains among the highest in Europe and the scale of the debt remains a risk factor post Troika exit (e) 214(f) 21(f) 216(f) Ireland Source: Department of Finance, EU Commission Euro Area 8

11 Section Three Irish economy showing positive signs 9

12 3a. Economy returns to growth The Irish economy returned to growth in Q2 213, with GDP rising by.4. Indications are that growth will pick up in H2 213 and in 214. Exports rebounded strongly in Q2 213 following a fall in Q1 213 while consumer spending also rose following a decline in the first quarter Another positive is the steady increase in the PMIs for both manufacturing and services. Consumer confidence has risen, employment has increased and unemployment has fallen over the course of 213 to date. Retail sales are also increasing GDP returns to growth in Q2 213 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q The slowdown in GDP over H2 212 and into the start of 213 was led by weakening export demand, partly caused by the patent cliff but also due to the recession in the Euro Area and poor export demand in some key markets Exports were down 4 on an annual basis in Q However, a quarterly increase of 4.3 in Q2 213 saw the annual change to Q2 increase to 2.6 Domestic demand fell once again in Q2 213, albeit a relatively small decline of.3 compared to 3 in Q1 213 Consumer spending increased in Q2 213 by.7. The 3.4 fall in investment in Q2 213 was the primary driver behind the fall in domestic demand Investment can be a volatile component of demand and the fall in Q2 213 was due to a large drop in aircraft deliveries In the construction sector there are indications of a modest recovery, due in part to an increase in renovations and home improvements. Overall we expect that investment will increase by 1. in 213 and rise by 7. in 214 as economic recovery gathers pace We expect personal consumption to rise by. in 213 before strengthening to 1.2 in 214 We expect Government spending to decline by 1. in 213 and 214 We have revised up our forecast for GDP in 213 to.4 from.. The external environment has improved with a robust recovery in some of our key trading partners, US and UK, while the Euro Area is also growing again in Q2 213 at.3 showing a tentative recovery taking hold Graph shows: Quarter on quarter changes in seasonally adjusted GDP Source: CSO Graph shows: Annual average GDP growth Source: CSO, BoI ERU forecasts Irish economy forecasts (e) 214 (f) Personal Consumption Government Consumption Capital Formation Exports Imports.. 3. GDP GNP Source: CSO, BoI ERU forecasts Annual GDP recovery continuing (f) 214(f) Exports will continue to be the main driver of economic growth over the longer term, however a return to growth of the domestic economy in 213 is a key turning point 1

13 3b. Domestic demand picking up We expect the domestic economy to return to growth in H2 213 and for this recovery to become further entrenched in 214. Domestic demand fell by just.3 in Q2 213, which was a significant improvement on the 3 decline registered in Q1 213 Consumer spending rose by.7 in Q2 213, following a decline in the first quarter. The outlook for consumer spending for the remainder of the year is positive, as the most recent retail sales data has improved Domestic demand set for a modest recovery in 213 Retail sales fell in both Q1 and Q2 213, albeit the Q2 213 fall was marginal at just.6. Sales jumped by 6.2 in July, thanks in part to the increased demand for cars due to the new registration system Retail sales rebounded strongly in Q3 213 growing by 4, implying a strong contribution to growth in the third quarter Consumer confidence rose to a 6-year high in September 213. We expect consumer spending to increase by. in 213 and 1.2 in 214 On the positive side, the labour market has improved, while earnings have increased marginally. Furthermore, price pressures have eased with annual inflation dipping to just.2 in September 213 However headwinds for consumer spending remain in the shape of household deleveraging, tax increases, social welfare reductions and tight credit conditions Investment fell by 3. in Q2 213, after a 6. decline in Q1. Investment in plant and machinery fell by almost 3 in Q1 213 and by almost 12 on an annual basis Investment excluding other transport equipment (mainly spending on aircraft, which is extremely volatile) increased by 12. in Q2 213 from a year earlier House building fell by 2.6 year-on-year in Q2 213, a marked deceleration from the annual fall of more than 21 over the previous 12-month period to Q Encouragingly, this was offset by a 6. annual rise in spending on home improvements Spending on other building and construction rose by almost 16 in the year to Q We expect total building and construction to increase by 6 in 213 and total investments to increase by 1. in (f) 214(f) Graph shows: Real domestic demand growth Source: CSO, BoI ERU forecasts Graph shows: Consumer spending growth Source: CSO, BoI ERU forecasts Consumer spending should gain momentum in (f) 214(f) Graph shows: Real investment growth Source: CSO, BoI ERU forecasts Investment recovery in prospect (f) 214(f) Government spending is likely to continue to decline due to ongoing budgetary rebalancing Overall, we expect to see domestic demand increase by. in 213 with a further pick up to 1.1 in

14 3c. Labour market recovery gains pace Employment growth over the past year has surprised on the upside. The labour market reached a turning point in mid 212. Since then, we have seen sustained increases in employment and a faster-than-expected fall in unemployment Employment increased in each of the 4 quarters to Q Over the 12 month period, employment increased by almost 34, or 1.8. This compares to a fall of 2, or 1.1 in the year to Q2 212 The composition of jobs growth over the past year is encouraging. Almost two thirds of the 34, increase was in full time employment with the remainder in part time employment Employment also increased across various sectors of the economy. 16, agricultural jobs were created in the year to Q2 213, while employment in industry (ex construction) rose by almost 7,. Construction jobs were up 3, while service sector employment rose 8, Pace of employment growth increasing Graph shows: Average annual change in total persons employed Source: CSO, BoI ERU forecasts Emigration projected to remain static in (f) 214(f) 21(f) Another encouraging development was the increase in the labour force, which rose by 11, in the year to Q2 213, the first annual increase since Q3 28 The participation rate also rose in Q2 213 to 6., marking the first annual increase since Q4 27 The level of emigration is projected to remain static in 213 compared to 212. According to the CSO, 89, people will emigrate in 213, offset by continued substantial inward migration of 6, people The latest Live Register figures show that unemployment has fallen even further since end Q The unemployment rate was estimated to be 13.2 in October down from a peak of over 1 in early 212 The fall in unemployment since Q2 213 suggests that employment growth is continuing and we expect a full-year increase in employment of 1.7 or 29, In 214, we expect a similar rate of employment growth and are pencilling in an increase of 1. We expect the unemployment rate to average 13. in 213 and to fall further in 214 averaging Graph shows: Estimate of migrants (s) per year Source: CSO Immigrants Emigrants Net Migration Decline in unemployment continuing Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Q3 Q4 21 Graph shows: Unemployment rate as a of total labour force Source: CSO Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q

15 3d. Property market improvement continues The property market recovery appears to have gained pace over the course of 213, with Dublin continuing to outpace other areas of the country. Property prices showed signs of bottoming in 212, but it now appears that gains in 212 were driven by the ending of the mortgage interest relief scheme The timing of the ending of the scheme caused distortion in the market and saw prices fall again at the back end of 212 and into 213 According to the CSO, national residential property prices hit a new low in March 213 with prices estimated to have fallen 1 from the peak at that time Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 National property prices rising (yoy), led by Dublin outperformance Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 National all residential properties National excluding Dublin all residential properties Dublin all residential properties Graph shows: Annual change in property prices Source: CSO May 12 Jun 12 Jul 12 Sep 12 Oct 12 Aug 12 Dec 12 Jan 13 Nov 12 Mar 13 Apr 13 Feb 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 However, since then, residential prices have increased steadily amid renewed signs of activity in the market Residential property prices have increased in every month since April 213. Residential property prices were 3.6 higher in September 213 than a year earlier 1, 8, 6, Housing market activity picking up again The Dublin property market recovery continues to outpace the rest of Ireland. In the 3 months to September, Dublin property prices increased by 9. while prices on an annual basis were up 12.3, the largest annual increase in over 6 years In contrast, property prices in the rest of Ireland excluding Dublin fell by.1 in the 3 months to September 213 and prices are still falling on an annual basis with a yearly decline of 2.6 4, 2, Q1 Q2 Q3 Q4 Q1 Q2 Q National all residential properties National excluding Dublin all residential properties Dublin all residential properties Graph shows: Number of registered transactions in Irish property market on a quarterly basis, based on Property Price Register data Source: as at A lack of supply in the capital has boosted prices. In addition, larger urban areas were always more likely to experience a stronger recovery given greater pools of demand Activity levels are picking up with transaction data suggesting a steady increase over the course of the year New mortgage lending for property purchase has recovered after a sharp fall in Q In Q2 the annual increase in the value and volume of new mortgage lending was up just over. Affordability continues to improve and it is now at its best levels since Today, an average 2 year mortgage would cost under 2 of estimated income, down from c.4 in Q1 Q2 Q3 Q4 21 Mortgage lending growth flat in Q2, after dip in Q1 213 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q n Volume n Value Graph shows: Annual change in volume and value of total mortgage loans Source: Irish Bank Federation 13

16 3d. Property market improvement continues (cont.) House building may bottom in 213. The available data on completions shows that just under,7 houses were completed in the first 9 months of 213 slightly down on the 6, completions in the same period of 212. We estimate completions for 213 will be c.8, 1 Private rents continue to rise Leading indicators such as planning permissions and home bond registrations have picked up of late and the trend suggests completions will rise in 214, which would be the first annual increase since 26 The number of houses currently being built is below estimated longer term needs and the housing stock as a whole is currently shrinking A small stimulus measure announced in Budget 214 includes a rebate scheme for house improvement work. This should help the construction sector with new reliefs for sole traders Rental market data indicates a strong recovery in residential rents, reflecting the latent demand for housing and a larger cohort of the population choosing to rent According to the CSO CPI index, private rents rose at an annual rate of 7.4 in Q3 213 and are up c.12 at the end of September 213 from their trough at the end of 21 This view is backed up by the DAFT Residential Property Report which showed an annual rise in rents in the country as a whole of 4.2, while the increase in all areas of Dublin was between 6.3 and Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Graph shows: Annual change in private rents Source: CSO CPI index Private rents (annual change) Property investor yields substantially improved since boom 26 (Q4) 213 (Q2) Dublin City Centre North Dublin City South Dublin City Dublin Commuter Counties Munster Cork City Connaught/Ulster 3..7 National average Graph shows: Average investor yields Source: Daft rental report Q The increase in property prices of late, combined with steadily rising rents may prompt would-be buyers to bring forward purchases, thus further supporting prices in the coming months Commercial rents beginning to increase In Q2 213, the average investment yield in Dublin was 7.8 and nationally was.7. This represents a doubling of yields from the peak of the housing boom Commercial property prices may be bottoming. The sector will be further supported by an extension of the moratorium on capital gains tax announced in Budget (H1) In Q3 213 the Investment Property Databank (IPD) estimates that commercial property prices were up.3, while Lisney estimate commercial rents increased by 2.9 Source: Lisney Commercial Rent Index Q2 213 All years bar 213 are Q4 index The increase in rents and prices so far this year suggest the commercial property sector should post another positive total return figure in

17 3e. Exports stage recovery after muted start to year Exports recovered strongly in Q2 213, after falling in the first quarter of the year. The performance of exports has been boosted by economic recovery in some of our key trading partners Export pickup positive for GDP growth The recovery in economic activity in Q2 213 was driven by a rebound in exports. Exports rose by 4.3, more than reversing a 3.4 decline in Q1 213 As the impact of the patent cliff faded goods exports rose by 3.8 in Q2 213, following a fall of almost. in the previous quarter The pharmaceuticals industry appears to be in recovery after the negative impact of the patent cliff. Production in this sector fell by 3 in September 212 following the bulk of the patent expirations. Production has recovered since then and in August 213 was up 36 from the low The expiration of patents is a cyclical occurrence in the pharmaceutical industry and we fully expect Ireland to continue to attract new investment in this sector Services exports increased by 2.6 in Q2 213, having registered flat growth in Q1 213 On an annual basis, total exports rose by 1 in Q The year-on-year decline in goods exports slowed to less than 2 from more than 9 in Q The annual growth in services exports re-accelerated to 3.6 in Q2 213 from 1.3 in Q1 213 The pick up in exports saw the merchandise surplus rise to c.e1bn in Q2 213 a sixth consecutive quarterly surplus Export performance has been boosted by economic recovery in some of Ireland s key trading partners The US and the UK economies are growing steadily and hence demand for Irish goods should increase. The nascent recovery in the Euro Area is also a positive development for Irish exports The strength of the euro against the dollar and particularly sterling is however a concern as it makes Irish goods more expensive. The average euro exchange rate versus sterling was.81 in 212 but has averaged.8 so far in 213. The UK is the primary market for the majority of Irish small to medium sized exporters Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Consumption Government Investment Exports Graph shows: Changes in quarterly seasonally adjusted GDP components indexed to base of 1=Q4 27 Source: CSO Exports continue to drive growth, domestic economy improving Percentage point contributions n Domestic Demand (ex. Stocks) n Net Exports n Value of Stocks Real GDP Graph shows: Contributors to real GDP Growth Sources: CSO, BoI ERU forecasts Trading partners growth prospects improving (f) 214(f) 21(f) n Euro Area n US n UK n World Graph shows: Real GDP growth rate Source: IMF World Economic Outlook (WEO), October (f) 214(e) 1

18 3e. Exports stage recovery after muted start to year (cont.) We expect export growth to rise further over the second half of 213. According to the monthly merchandise trade data, the volume of goods exports in July-August was almost 6 higher than Q2 213 outturn In addition, the export components of the Investec Purchasing Managers Index (PMI) of manufacturing and services are both running above the key level indicating expansion Exports for the year as a whole are still likely to be broadly flat versus 212 due to the weak start to 213 A positive development of recent years is the movement in the Balance of Payments. The Balance of Payments in 212 reached a record level of over e7bn, or circa 4. of GDP The household and corporate sectors are deleveraging and are now recording large surpluses, which more than outweigh the continued sizable deficits in the public sector. This highlights the rebalancing that has occurred in the economy over the past few years The Balance of Payments surplus for H1 213 was almost e2bn higher than at the corresponding stage in 212, so it looks like the full-year 213 outturn will beat the record surplus recorded in 212 Looking forward, we expect that export growth will be flat in 213 before recovering to 3. in 214. We also expect imports to be flat in 213 before growing by 3. in Export performance improving after difficult start to (f) 214(f) Graph shows: Real export growth Source: CSO, BoI ERU forecasts Balance of payments to remain at record highs (f) 214(f) n Ireland n Euro Area Graph shows: Current account balances as a of GDP Source: EU Commission, BoI ERU Our forecasts assume that export activity will pick up over the remainder of 213. This is dependent on the recoveries in the UK, US and Euro Area continuing While some downside risks remains, such as renewed slowdowns in key markets, we expect that the recent weak performance of exports was exceptional. Exports should re-emerge as the key driver of the Irish economy over the next few years Irish exports by type and destination n Services n Chemicals & pharmaceuticals n Other manufacturing n United States n United Kingdom n Euro Area n Rest of European Union n Rest of the World Pie shows: Estimated breakdown of exports in 212. Destination of merchandise exports in 212 Source: CSO 16

19 Contact details Michael Crowley Senior Economist +33 () Maria McDonagh Head of Debt Investor Relations +33 () Patrick Mullane Economist +33 () Jennifer Howett Head of Funding Communications +33 () Disclaimer This document has been prepared by the Economic Research Unit at Bank of Ireland Global Markets ( GM ) for information purposes only and GM is not soliciting any action based upon it. GM believes any information contained herein to be accurate but GM does not warrant its accuracy and accepts no responsibility. No prices or rates mentioned are bids or offers by GM to purchase or sell any currencies, securities or financial instruments. Any decision made by a party after reading this document shall be on the basis of its own research and not be influenced or based on any view expressed by GM. This document does not address all risks. Any party should obtain independent professional advice before making any investment decision. Any expressions of opinion reflect current opinions as at 31st October 213. This publication is based on information available before this date. This document is the property of GM. The content may not be reproduced, either in whole or in part, without the express written consent of a suitably authorised member of GM staff. The Governor and Company of the Bank of Ireland is regulated by the Central Bank of Ireland. In the UK, The Governor and Company of the Bank of Ireland is authorised by the Central Bank of Ireland and the Prudential Regulation Authority and subject to limited regulation by the Financial Conduct Authority and the Prudential Regulation Authority. Details about the extent of our authorisation and regulation by the Prudential Regulation Authority and regulation by the Financial Conduct Authority are available from us on request. The Governor and Company of the Bank of Ireland is incorporated in Ireland with limited liability. Registered Office - 4 Mespil Road, Dublin 4, Ireland. Registered Number - C-1.

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