Figures released by the Central Statistics Office last week
The Central Statistics Office is a reputable and professional State agency that adheres to best practice and complies with all relevant EU statistical compilation and reporting standards.
It is doing its job and the messenger should not be shot.
The issue seems to be more with the relevant EU statistical compilation and reporting standards.
It appears that this week’s anomalous and ridiculous GDP figure was attributable mainly to Irish-domiciled multinationals executing one-off transfers into the State of the book value of valuable assets such as commercial jetliners and intellectual property.
If these asset transfers were one-off events (which by definition are no indicator of the robustness or otherwise of the Irish economy), then why are they a component of GDP in the first place?
If they were indeed one-off, does this mean that next year our national debt/GDP ratio will oscillate back from this year’s 80 per cent toward 90 per cent again?
While the debt/GDP ratio is only one of many debt-related financial metrics, it has a high public profile and it is used not only by the Government as an input for medium-term financial planning but also by EU financial regulatory bodies and sovereign credit ratings agencies.
If such a significant planning and monitoring metric can be so distorted and discredited by anomalous events, should it not be replaced, or else have the once-off events excluded from it?
Truly there are lies, damn lies and statistics.
Arthur Boland,
Dublin 8.
Statistics and ‘leprechaun economics’ (Irish Times letters page)
Previously: How Much?
To Arthur. Well said.
GDP is an international standard, if the CSO did not report on it then they wouldn’t be doing their jobs. It is what it is, people going off their heads about this measure existing and being what it is need to chill out quite frankly.
As for the need for the CSO to develop another measure more suitable for Ireland’s needs given the financial activity we have, I think everyone is agreed that this is required.
Drove me crazy that people who should know better (like Krugman) were painting it as ‘Ireland cooking the books’ or something, when there were rational explanations behind why the figures were so skewed.
I’m pretty sure places like Italy include estimates of criminal activities in their GDP? It may be criminals money but it does get spent in the economy and therefore must be counted as GDP. Ha! God, I wish I was making that up.
There was a big issue with this a year or two ago in the UK, whereby the way the value of the economy was changed by European rules to include illegal activites such as drugs and prostitution etc. The result was it dramatically increased the amount that the UK had to pay into the EU coffers.
UK has all that, lucrative, financial services, white collar crime cash.
Ireland has the nice loopholes to facilitate the moving of the crime cash
What this guy says.
So or debt to Gbp will be low making us more credit worthy in the eyes of credit agencies. Also the chance of us ever getting a deal on are bank debt are nonexistent as this makes it look like our debt is manageable. When really it’s only manageable because our interest rates are historically low.