Multinationals could skew GDP figures again, CSO chief warns
Published 14/10/2016 | 02:30
Shock lurches in official Irish growth figures - dubbed 'Leprechaun Economics - could happen again, the head of the Central Statistics Office (CSO) has warned.
Director general Padraig Dalton said a repeat of the 26pc GDP surge announced in July is unlikely. But because large foreign firms continue to shift intellectual property assets to Ireland, further jumps in GDP may take place, he said.
"We could actually see additional level shifts, obviously not to the scale that we've seen in July, but we could see additional level shifts in our GDP and GNP because that environment still exists," Mr Dalton told the Oireachtas Finance Committee.
The CSO's Jennifer Banim also told the Committee that Brexit could cause further complexity in the national accounts.
Official figures released in July showing the economy grew by a massive 26pc last year - more than three times faster than first thought - were quickly dismissed as "farcical", with Nobel-prize winning economist Paul Krugman describing them as 'Leprechaun economics'.
Economists said that while growth is strong, the official figure was dramatically overinflated - because it was driven primarily by the activities of Ireland's multinational and aircraft-leasing sectors.
Mr Dalton said yesterday that the headline indicators of GDP and GNO are of "limited value" in providing insights into what's going on in the Irish economy.
He said the 26pc surge was driven by relocations of entire balance sheets to Ireland. "The relocated balance sheets were dominated by intellectual property, characterised as intangible assets.
"The practice of relocating intellectual property to Ireland has been growing in recent years, but the scale of the relocation in 2015 was substantial, and added €300bn to Ireland's capital stocks."
Mr Dalton said associated with the relocations were significant increases in contract manufacturing activity attributable to Ireland.
As a result of this, the balance of trade in goods and services in the national accounts rose from €35bn to €70bn over the year.
Mr Dalton said the accuracy of the figures produced by the CSO have not been called into question, despite being scrutinised by international organisations including the IMF, OECD and Eurostat.
"They have all spoken about how the events and the publication of the figures in Ireland this year are now providing a basis for a conversation that has been going on for years about how do you deal with globalisation in a national accounts perspective?
"How do you account for that in a way that is meaningful? And that has been happening in a conceptual way up until this year. Our publication this year has moved the conversation into the real world."