Tuesday 16 January 2018

No 'leprechaun economics' as growth rate falls

Central Bank boss Philip Lane
Central Bank boss Philip Lane

The Irish economy grew by just 0.6pc in the second quarter of the year - and that was driven by the activities of "several" multinationals, according to Central Statistics Office (CSO) figures released yesterday.

The CSO said the growth was driven by around €9bn of "investment in intellectual property products imported from abroad" - a reflection of the activities of multinationals who have moved assets here.

The CSO said it could not identify the data of individual companies. Despite recent claims Apple has been driving Irish growth figures, senior CSO statistician Christopher Sibley said that "several" companies were involved.


The activity by multinationals offset a decrease in personal spending - down 0.5pc compared to the first quarter, with lower numbers of car registrations having an impact, the CSO said.

GDP was 4.1pc higher than at the end of Q2 last year.

The figures put Ireland's rate of economic growth above the EU average for the second quarter, but behind countries including Spain, Hungary, and Romania, the CSO said.

It's the first set of GDP figures released by the CSO since the body said revised figures for 2015 showed the economy grew more than 26pc in 2015.

The figure was derided as "leprechaun economics" - skewed by a big shift of activity to Ireland by some multinationals.

The CSO has acknowledged there is a need to develop "a broader suite of domestically focused indicators and information".

It is convening an expert group - chaired by Central Bank Governor Philip Lane - that will develop recommendations on "how best to meet the statistical needs of users".

"The small, open and highly globalised nature of the Irish economy makes it increasingly difficult to represent the complexities of economic activity in Ireland in single headline indicators such as GDP and GNP," CSO assistant director general Jennifer Banim said.

"What we all want are robust indicators that are based on reasonably stable data, but it's increasingly difficult to achieve that with one figure," Ms Banim added.


"You have to look beyond the headlines, you have to look at what's happening and you have to really start putting together views of the economy, we think, built out of the framework from what we have available."

Davy Stockbrokers chief economist Conall Mac Coille described yesterday's figures as "disappointing".

"The modest growth in Q2 is disappointing given the 2.1pc contraction in Q1 GDP has been left unrevised and seems artificially weak in view of the 1pc employment growth over the same period and with the composite PMI (purchasing managers' index) averaging close to 60 (anything over 50 indicates expansion)," he said.

He added that the fall in consumer spending was "extremely surprising".

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