Blow for economy as GNP rises by just 0.1%

THE growth of the nation’s wealth virtually stopped last year as Gross National Product (GNP) increased by just 0.1%, the lowest increase in 20 years.

In sharp contrast Gross Domestic Product (GDP), which includes the wealth created by foreign companies in Ireland, stormed ahead in 2002 by 6.9%, fuelled by export growth in the multinational pharmaceutical sector.

A massive €25.9 billion left the country in income earned by foreign companies and interest paid on the foreign component of the national debt, according to the figures released by the Central Statistics Office (CSO) yesterday.

The CSO figures show that as GNP stagnated last year consumer spending grew by 2.7% in real terms, with Government spending powering ahead by 9.4%.

Commenting on the disparity between GNP and GDP figures, Finance Minister Charlie McCreevy blamed it on what he termed the Viagra effect and poor performances by Irish companies abroad.

“One product is mainly responsible for this,” he said, referring to the male impotence drug, Viagra, manufactured in Cork by Pfizer.

Mr McCreevy said that over the past 20 years there had been a big difference between GNP and GDP.

He said he believed GNP was, in reality, closer to 2% and denied a dual economy operated in Ireland.

Mr McCreevy said the trade-off for the repatriation of profits by foreign-owned companies was job creation in Ireland, both directly and indirectly, by these companies.

The minister said GNP was down because of poor performance by companies operating abroad, like Elan and AIB, that normally brought large profits back to the country.

Fine Gael spokesman on Enterprise, Trade and Employment Phil Hogan blamed a failure to deliver on reform, increased competition and careless management of the public finances by the Government. “With the significant number of jobs lost, particularly in manufacturing, it is reasonable to assume this year we will see negative growth in the economy,” he said

Labour Finance spokesperson Joan Burton said the figures spell bad news for many families, particularly older workers in vulnerable manufacturing jobs.

“GNP growth last year was the worst since 1983, one of the darkest years of the 1980s. As manufacturing jobs continue to haemorrhage, it is increasingly clear how harsh a price is being paid for the incompetence of the minister who invited us all to party on,” she said.