Economists clash over growth figures
Jim Power, chief economist, Friends First, said the growth numbers for last year present a clear picture of an economy experiencing two very different growth performances.
“The eternal optimists and Government politicians no doubt will point to GDP growth of 6.3% as evidence that all is well with the economy.
“The realists will, on the other hand, argue with strong justification that the 0.6% growth in GNP is much more representative of the pain felt in the real Irish economy last year.”
Mr Power was commenting on the latest Central Statistic Office figures for last year showing that in GDP terms the economy grew by 6.3%, but in GNP terms growth was just 0.6%.
Mr Power and a majority of economists favour the GNP measure of how the economy has performed.
GNP is what’s left in the economy after the multinationals have repatriated their profits and inflows of funds to the country have been added.
Last year, outflows were up and inflows down, creating a major gap between the two measures of the economy.
Economists such as Mr Power and Robbie Kelleher of Davy Stockbrokers and Pat McArdle of Ulster Bank argue that the money lost is real and therefore the 0.6% growth figure for GNP last year is the true measure of how we are doing.
But Eunan King of NCB strongly disagrees.
“We are saying that the economy is still growing strongly and that the bottom line evidence of that is that employment is rising, albeit at a slow rate,” Mr King said.
The rise in unemployment “is not significant and is understandable against the rise in the immigration and taken together with the underlying rise in the growth in the labour force”, he said.
“If this economy is doing as bad as some suggest how come employment has risen in each of the last three years?” he asked.
