Economics: Third-quarter Irish Balance of Payments data forecast to show healthy surplus

Along with the GDP numbers for the third quarter we will also get the official Balance of Payments figures for the same period. The Balance of Payments results for the second quarter showed that the current account recorded a deficit of €872m (1.2% of GDP), an improvement on the deficit of €1,653m (2.5% of GDP) in the second quarter of 2016.

The Balance of Payments has become a more closely watched indicator internationally since the euro crisis erupted. A deficit is a sign the economy is uncompetitive. Ireland and other “peripheral” economies were running deficits before the crisis, but Ireland has now returned to substantial surplus. The surplus is also important in relation to the economy’s very large foreign debts. These cannot be paid down unless a surplus is being run on the Balance of Payments.

Another strong year is on the cards in 2017 and we are now looking for a surplus of around €13bn (4.7% of GDP). For the third quarter we are looking for a current account surplus of €1,500m, up from a positive balance of €1,154m in the same period last year.