Ireland’s economic figures still not adding up

The ‘leprechaun economics’ effect is still distorting how we measure our economy

Yet again the measurement of what is going on in the economy is distorted by the activities of multinationals

Yet again the measurement of what is going on in the economy is distorted by the activities of multinationals

 

The Central Statistics Office (CSO) said, as it published the latest national economic figures, that an expert group examining how to come up with alternative indicators to reflect the domestic economy’s performance expected to have its report finished by the end of the year.

We can only hope it does – and that something happens as a result.

Because yet again the measurement of what is going on in the economy is distorted by the activities of multinationals.

It is not as dramatic as the famous “leprechaun economics” episode, which showed growth earlier this year at 26 per cent. yet much of the breakdown of the figures is completely useless. And it also means that the overall rate of growth remains overstated.

Modest

Goodbody stockbrokers calculate that the underlying domestic economy is growing at a rate of a bit more than 3 per cent – still double the euro area average. You could argue what the “real” rate of growth is, but it certainly is not 10 per cent or even 7 per cent.

This is not the CSO’s problem – it is measuring using international conventions – but a whole host of distortions are playing into the data.

From movement of intellectual property by multinationals – which has made a complete mess of the investment and import figures – to contract manufacturing and profit repatriations, we can again see the impact of big companies on the data of a small economy.

Options

Exports are more sluggish, while consumer spending is moving ahead, although modestly enough at just over 2 per cent on an annual basis.

It is important that we calculate our policy options based on realistic figures. Already the distortions are affecting some key figures, such as the debt-to-GDP ratio now hopelessly distorted. This is why the expert group’s work is important.

To decide what to do next, it is first necessary to work out exactly what is going on now.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.