Friday 28 July 2017

'Leprechaun Economics' appears to wear off as Irish growth levels plunge

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Donal O'Donovan

Donal O'Donovan

Irish growth levels plunged dramatically last year as the extreme effects of so called Leprechaun Economics appeared to wear off.

Official preliminary growth figures show the economy grew by 5.2pc in 2016, measured in terms of gross domestic product  (gdp). That's down from 26pc in 2015 - a level no one believed gave a true indication of activity, however.

Personal consumption, seen by many as a  good measure of true activity in the domestic economy was 3pc in 2016.

Government spending rise fastet, up 5.3pc in the same period.

Figures from the Central Statistics Office record growth of 9pc last year, in terms of gross national product (gnp), a measure the leaves out some activities of multinationals.

Growth here remains the fastest in the EU.

The latest figures show continued growth in the economy but indicate that some distortions may worked through the system.

However, a 45.5pc increase in capital formation - usually a measure of investment- indicates that anomalies are still being thrown up in the Irish accounts. 

In 2016 that massive leap in capital formation is driven by the import of intellectual capital - legal rights to products or licences.

That is understood to reflects one or a small number of multinationals shifting legal assets to Ireland during last year. That was cancelled out in the overall growth figures by a rise in imports.

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