The Central Statistics Office (CSO) is to examine how to provide more accurate measures of Ireland's economic performance amid the controversy over the revised 26 per cent growth rate for last year.
The move comes as the Central Bank defended the agency's handling of the national accounts, while acknowledging the figures presented a misleading picture of the Irish economy.
In a letter in The Irish Times, published today, the Central Bank said the CSO's data was compiled in line with international standards and was correct.
“However, as the CSO stated, a number of factors, ranging from purchases of new aircraft by leasing firms to reclassification of balance sheets in the context of redomiciling of multinational firms, have heavily impacted on the 2015 accounts,” the bank said.
“From a macroeconomic perspective, therefore, headline GDP growth figures present a misleading picture of the underlying performance of the Irish economy.”
More accurate
The Central Bank said other indicators, such as domestic demand and employment growth, gave a more accurate indication of the economy’s performance.
In a statement, the CSO said it would “convene a high- level cross-sector consultative group to examine how best to provide insight and understanding of all aspects of the Irish economy”.
This follows questioning of the GDP figures from a range of international and Irish analysts, and a general acceptance that the recorded growth rate did not reflect underlying economic activity.
Apart from corporate inversions and aircraft leasing, the reclassified figures were inflected by other one-off factors, including an upsurge in offshore manufacturing and the relocation of international patents here.
As a result, the State’s headline budget deficit for 2015 has been revised down from 2.3 per cent to 1.8 per cent, which equates to €4.6 billion.
The CSO said the revision was “mainly due to methodological or technical changes”.
The 1.8 per cent deficit was an improvement on the 2014 position of €7.2 billion, or 3.7 per cent of GDP, it noted.
Revenue growth
The office cited a rise of over 7 per cent in Government revenues, which grew from €65.8 billion in 2014 to €70.6 billion in 2015, and the “substantial increase” in GDP in 2015 as the “two main factors” leading to the fall in the deficit as a percentage of GDP.
Speaking in the Dáil, Taoiseach Enda Kenny also acknowledged the misleading nature of the numbers.
He said Ireland’s real growth was in jobs, consumer spending and the drop in unemployment, which represented the real value of the economy.
Mr Kenny said the Department of Finance's figure for economic growth last year was in the region of 3.5 per cent to 4 per cent and that future policy would be based on "a more normal growth rate''.
He was replying to Fianna Fáil leader Micheál Martin who said the CSO should be asked to design a proper, accurate way of calculating the real size of the Irish economy.
