Wanted: GDP to pass ‘basic sniff test’
In more innocent days it used to be about whether GDP or GNP best measured economic growth and prosperity.
That was before the “leprechaun” jibe of a few summers ago stung officials to do something about the mess of conventional economic measures for Ireland, home to a whole family of multinationals whose accounts play havoc with national accounting.
A high-level panel came up with a modified measure called GNI*, which stripped out all those multinational accounting nasties, such as aircraft leasing and intellectual property imports, as well as contract manufacturing, that had led to “leprechaun” GDP growth rate of 26%.
But it looks like many will have had full careers, retired and grown into old age before we have a good handle on what is going on in the Irish economy.
That’s because the Economic and Social Research Institute is near-flabbergasted by the distortions in the 2017 national accounts that supposedly show investment here dropped by over 22% and imports fell by over 6%.
It wants work to be done beyond the GNI* measure and for Ireland to prepare a full set of alternative national accounts that truly tell us about households and firms in the economy.
As Professor Kieran McQuinn told reporters, the economy is indeed growing strongly, probably by 5%, but few believe it ballooned by the Europe-beating rate of 7.8% last year, as the official numbers contend.
“A basic sniff test” tells us that those numbers are wrong, he said.
