The Irish economy appeared to grow by a quarter last year but that figure is only part of the story.
Much of the surge in Irish economic growth is attributed to the relocation of multinational assets and activities. This has significantly inflated the figures. Initial forecasts had suggested growth of around eight per cent.
One consequence of the revised data is a sharp improvement in Ireland’s debt-to-GDP ratio, now expected to fall below 80 per cent, compared with earlier projections of about 93 per cent. This shift potentially gives the government greater flexibility in upcoming budget decisions.
Despite the remarkable figures, questions remain about what they mean for everyday life. For many, the apparent boom may not translate into tangible gains.
Austin Hughes, economist with KBC Bank, argues that households are unlikely to feel any better off, pointing instead to shortcomings in how Ireland’s economic performance is measured. While acknowledging that the economy is in relatively good health, with rising employment and strong tax revenues, he cautions that it is not expanding at anything like a 26 per cent rate. Similarly, David Duffy of the ESRI estimates that underlying growth is closer to five per cent.
The data predates the United Kingdom’s vote to leave the European Union, but Brexit was already dominating discussions among finance ministers in Brussels. Eurogroup chairman Jeroen Dijsselbloem said clarity is urgently needed on the future relationship between the UK and the EU.
An RTÉ News report broadcast on 12 July 2016. The reporter is David Murphy.