Irish National Income

National Income

GDP is a measure of what the country produces in goods and services as a result of production activity. In Ireland the GDP figures are distorted by the amount of foreign owned firms that are based here as the profits are sent overseas so GNP gives a much clearer picture. In terms of GDP per capita, Ireland is ranked as the 5^th wealthiest country in the OECD however in terms of GNP Ireland ranks below the average in 10^th position. Gross Domestic Product measures the total of what is produced in country in a year; GNP measures what is produced after factor flows are accounted for.

Irelands economy finally woke up in the mid 90^s on the back of export growth created by foreign direct investment .It achieved growth rates above 5% from 1995 till 2006 this long period of growth rates fuel complacency and inflation and when growth turned negative Ireland was hit much worse than its neighbours. Ireland position could have been much worse its exports didn’t suffer anywhere near the percentage falls suffered by its neighbours in the global down turn. After enjoying such a long period of constant economic growth the Irish people and business are suffering from a sever lack of confidence following the recent negative growth spiral this lack of confidence is resulting in a self-fulfilling prophecy as the domestic economy fails to recover. Much of Ireland’s growth rate of 2004-2006 can be attributed to consumption and private investment which has now disappeared and is been slowly replaced by exports.

 

Ireland GDP figures and growth rate has been driven by exports since the mid 1990^s as Irelands exports dropped due to the global recession 2007 so did our GDP figures this was compounded by the collapse of the property market and domestic economy however as we can see from the above graph exports have returned to growth and are dragging the economy back to growth.

Source NCC

_{Source Euro stat}

In purchasing power Germany and France are considerable weaker than they were in 2005 with only a slight gain for Spain. Ireland is considerable stronger than its 2005 position and even when we take into account the collapse of the domestic economy in 2007 and allow a 15% adjustment to allow for multinationals Ireland is still one of the strongest of four.

^{Source OECD}

When viewed in dollars and allowing a 15% reduction for multinationals we should be around the middle of the group. This I would view as positive in light of our constant pessimism even after the loss of lead we enjoyed in 2005.

The distribution of income is not even with some benefiting disproportionately. In Ireland the dramatic rise in income increased people’s expectations and wants, it also had negative effects such as third world traffic jams. GDP should be used as a guide only as it only takes into account what can be measured in monetary terms and does not reflect living standards.