GNP growth ‘could double’

GNP growth could more than double the GDP figure is 2003 economists have predicted.

This is set to raise a fresh controversy about how best to measure Irish economic growth performance or the lack of it depending on your view point.

For several months some of the top economists in the country have argued GNP was the best measure of Irish economic performance.

“That’s what’s left when the multinationals repatriate their profits,” said Robbie Kelleher head of research at Davy Stockbrokers.

Others agreed.

Some disagreed and argued their colleagues were changing the rules to suit their negative take on the economy.

It will be a huge irony according to Dan McLaughlin of Bank of Ireland Group Treasury if this year and next the same economists will now have to point to lower GDP to prove their case that the economy is performing worse than the up front evidence suggests.

In his assessment Mr McQuaid of Bloxham Stockbrokers in his Global Market Outlook June 2003 says GDP this year will come in at no more than 2% while GNP will be produce a growth figure of 4.3% turning the argument about economic performance on its head.

Mr McQuaid however has consistently said on this debate that the truth probably lies somewhere in between.

The ultimate test of the Irish market economy will be the level of job creation or job losses and despite concerns about the manufacturing side the overall figure has held up reasonably well, boosted by government job creation.

The reason for the dramatic switch on the growth measurements is that multinational exports that boomed last year created a GDP growth of 6.3%.

That then translated into huge profit repatriations and left GDP much higher than GNP.

This year exports could well fall below last year’s level but the export figures for the first three months of this year do not at this stage have volume certification so there is no way of judging the overall state of exports at this stage, said Mr McQuaid.