Cantillon: Ireland fastest-growing economy or on brink of recession

Ever heard the one about the statistician who drowned trying to wade across the river? He was told it was only three feet deep . . . on average. The joke provides an easy segue into last week’s GDP numbers, which put the economy on a par with a bounding cheetah on the Serengeti.

Understandably the 26 per cent metric distracted attention from the 2 per cent contraction in GDP in the first quarter of this year.

The latter means – and this is equally hard to take seriously – we’re only one quarter of negative growth away from a full-blown recession. And with the figures seesawing wildly, this is hardly a remote possibility. So depending on how you read it, we’re either the world’s fastest-growing economy or one that stands on the brink of recession.

It's pretty clear to most that neither paradigm provides even the remotest semblance of economic truth. Though a coterie of commentators insisted our economic performance is better viewed through the prism of consumer spending, which grew 4.5 per cent last year, announcing a 26 per cent rate of GDP growth has damaged our standing and the "leprechaun economics" tweet by Paul Krugman was the coup de grâce.

The new figures also had the effect of reducing our national debt as a percentage of GDP, from 94 per cent to 78 per cent, bringing it from well above the European average to below it in a single bound.

However, in absolute terms, Ireland’s national debt actually rose during the period as the Government continued to borrow and still equates to about €43,000 per person.

Even the prudent NTMA suggests Ireland's debt position is better expressed as a percentage of general government revenues, which puts it at about 130 per cent – more like Italy's, which is increasingly seen as the euro zone's new fault line. Viewed this way, Ireland remains extremely vulnerable to a major economic reversal. Could this come in the form of Brexit? Already Deutsche Bank is saying the impact on Ireland will be greater than predicted.

All of which goes to show what we knew at the outset – the figures need to be overhauled.