Tuesday 26 September 2017

Irish GDP growth at staggering 26.3pc last year, economist says figures are 'meaningless'

Ireland's status as a leading world centre for aircraft leasing is perhaps more a product of business history than our favourable corporate tax treatment. Stock photo: PA Wire
Ireland's status as a leading world centre for aircraft leasing is perhaps more a product of business history than our favourable corporate tax treatment. Stock photo: PA Wire
Colm Kelpie

Colm Kelpie

The Irish economy grew, in GDP terms, by 26.3pc last year, according to revised official figures.

That's dramatically faster than the 7.8pc growth rate estimated in March, the Central Statistics Office said this morning.

The  dramatic hikes were due to contributions from the likes of the aircraft leasing sector and multinationals  -increases in the stock of capital assets of companies, company relocations, a massive jump in net exports due primarily to contract manufacturing, and in part to inversions.

The revised data is due to "more complete and up to date data" than what was available earlier this year.

GNP, which strips out the activities of multinational companies based here, grew by 18.7pc in 2015. The earlier estimate was for 5.7pc.

Net exports in 2015 grew by 102.4pc, while total domestic demand increased 9.9pc.

GDP fell by 2.1pc in the first three months of this year, compared with the previous quarter.  GNP rose by 1.3pc, the CSO said.

But year-on-year, GDP rose by 2.3pc and GNP increased 10.6pc.

Net exports in the first three months of this year rose 11.2pc, but investment declined by 16.1pc.

Finance Minister Michael Noonan said the debt-to-GDP ratio is now expected to be around 80pc – considerably lower than the 88pc noted in the Summer Economic Statement published last month.

“Other indicators, including tax revenue published last week, consumer spending and labour market data are all consistent with an economy where recovery is firmly established,” Mr Noonan said, in a statement.

“I think the figures released by the Central Statistics Office show that Ireland’s economy continues to grow. Peoples’ lives are improving with more at work than at any time since the onset of the downturn. We no longer need to impose swingeing cuts to public services rather we have room to invest in services and infrastructure. Ireland is now in a position where we borrow relatively small amounts at very low rates which ensure that investment is made in delivering more than the bare minimum of services to our citizens. These are all evidence of a country growing in real terms.”

But economist Jim Power dismissed the 26pc figure as “meaningless”.

“It is impossible to interpret what’s going on,” he said.

“There’s clearly a lot of balance sheet accounting transactions going on that are seriously distorting what is happening in the economy. What we have to do is look at what is happening on the ground. We need to look at employment, unemployment, tax revenues and consumer spending and consumer confidence.

“What they suggested in 2015 and what they’re suggesting in the first half of 2016 is that there is a reasonable level of economic activity going on. It feels like an economy growing at a rate of 4pc, 4.5pc, but it certainly doesn’t feel like a 26pc economy. I think in terms of international interpretation to what’s going on here, it’s a meaningless exercise.”

Online Editors

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