Investor Presentaiton

Ireland's headline numbers distorted; underlying growth strong but Brexit will slow pace in next 12-18 months • • GDP and GNP are exaggerated by the activity of multinational companies; behind the headline numbers Ireland is growing more slowly than before but still beats most of the euro area The National Accounts are distorted by the assets of several companies and some entire firms being reclassified as resident in Ireland. GDP and GNP series are suboptimal as a result. All other metrics show the economy is growing. Our underlying metric suggest the economy grew by 4.5%+ y-o-y in 2016. At the same time, employment is expanding; unemployment was down to 6.4% in May - a cyclical low. Consumer spending and investment have recovered. Consumption grew by 3% in 2016. There is pent up demand for investment e.g. housing supply is lagging demand, leading to soaring rents. Brexit will slow Irish growth in 2017 ■ The UK may enter recession after its vote to leave the EU: for every 1% drop in UK GDP Ireland's output may fall by anywhere between 0.3-0.8%. We are likely to see some impact this year; it was imperceptible in 2016. Government debt and deficit metrics are also distorted by GDP revisions; analysis should include other measures of Ireland's debt serviceability Government debt-to-GDP fell to 75.4% in 2016; and the GG deficit to 0.6%. The inflated GDP denominator means other metrics of debt serviceability are required to complement debt as a ratio of GDP. Debt-to-GG Revenue (274%), interest cost as a share of revenue (8.5%) and the average interest rate on Ireland's debt (3.1%) are superior measures for comparison with other sovereigns (2016 figures). Excluding the distortions, Ireland's fiscal picture is improving. Ireland is in primary surplus, revenue data in recent quarters has been steady and spending is relatively restrained. Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta National Treasury Management Agency

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