I propose to take Questions Nos. 162 to 165, inclusive, together.
In my Budget day speech in October of last year I outlined the Government's approach to restoring the economy to sustainable growth. This programme involves inter alia a sector-by-sector approach, where the Government looked to build on areas of strength of the economy and repair those sectors which were damaged. I am pleased to report that this approach has proven successful, with some noticeable gains recorded in some of the economy s key sectors over the last year.
Looking first at the agri-food and fisheries sector, which is Ireland s largest indigenous industry and a significant contributor to employment, 2013 proved a very successful year for the sector with strong employment growth over the year. Exports (in value terms) related to the agricultural sector increased by 7 per cent in 2013 and year-to-date outturn figures combined with the continued signs of recovery in key trading partners such as the UK augur well for further growth in 2014.
Another jobs-rich sector, which suffered greatly due to the global economic downturn, and one to which the Government has introduced a series of targeted policy initiatives, has been tourism. Last year was particularly strong for the tourism sector, with overseas trips to Ireland increasing by 7 per cent in annual terms. This was aided by the reduced VAT rate for products and services in place since July 2011, as well as by The Gathering, which contributed to a 14 per cent increase in tourism from North America in 2013. Encouragingly, the growth we have seen in the number of visitors to Ireland has also been reflected in the employment gains in the sector, with employment in accommodation and food services up by 13 per cent in the final quarter of 2013 when compared with the same period in 2011 after the VAT reduction was introduced. Another positive point is that the strong momentum gained in 2013 looks to have carried over into this year, with trips to Ireland up 11.3 per cent for the period December 2013 to February 2014 in year-on-year terms.
Of course, no sector was hit harder in the recession than the construction sector and while nobody wishes to see a return to the construction-reliant economy that preceded the downturn, some recovery in the sector is vital to support wider economic growth. On this front recent developments have been positive, with signs of a recovery in the sector following nearly six years of continuous decline. Employment in the sector has now stabilised while national accounts data show building and construction investment increasing by 12 per cent in 2013.
National residential property prices have begun to recover, having fallen 51 per cent from peak to trough. While this has largely been driven by a recovery in property prices in Dublin, prices outside of the capital now appear to have bottomed out and were up by 4.2 per cent over the year to February. As part of Budget 2014 I introduced measures to address the limitations of supply of suitable housing stock that seem to be impacting the Dublin market, including the extension of the Living City Initiative and the Home Renovation Initiative. The Government s Medium-Term Economic Strategy for the period 2014-2020 set out the intention to address remaining challenges in the construction sector. As part of this the Government will be publishing a strategy for a renewed construction sector in the near future.
In terms of overall price developments, the Harmonised Index of Consumer Prices (HICP) the comparative measurement of inflation across Europe increased by 0.5 per cent in Ireland for 2013 as a whole. The energy effect that was so pronounced in 2012 was not present in 2013, which was the predominant driver of the lower headline HICP over the year.
In February, annual HICP inflation was 0.1 per cent as energy and unprocessed food continued to act as a drag on inflation. Stripping out these two elements, core inflation measured 0.7 per cent which compares with a figure of 1.1 per cent for the euro area as a whole.
Irish core inflation has now been below, or on par with, euro area inflation for every month since February 2009. This has led to significant cost competitiveness gains over this period, while also serving to protect real incomes. Inflationary pressures are expected to remain relatively muted once again this year. Revised forecasts will be published in the Stability Programme Update to be published later this month.
