CSO seeks better measure of economic performance

The Central Statistics Office has announced the establishment of an expert group to look at developing better economic statistics for the Irish economy.

The move came as figures showed that the Irish economy grew by 0.6 per cent in the second quarter of this year, compared with the first quarter.

The Central Statistics Office said quarterly growth figures for gross domestic product (GDP) and gross national product (GNP) were the same. On an annual basis, GDP was 4.1 per cent higher than in the same period last year, while GNP was up 4.6 per cent.

Total domestic demand increased by 9.1 per cent during the quarter, driven mainly by investment in intellectual property products imported from abroad. The CSO said this offset a 0.5 per cent decrease in personal consumption, which was affected by lower levels of car registrations. Net exports dropped by 31.4 per cent during the quarter as growth in imports outpaced broadly flat exports. The rise in imports included intellectual property.

Compared with Q2 last year, personal spending was up 1.8 per cent, while capital investment jumped 21 per cent. Industrial output was up 1.9 per cent on an annual basis, with building and construction output 12.2 per cent ahead.

The growth figures have beenthe subject of controversy since the CSO earlier this year revised the figures to show thatIrish GDP grew by 26.3 per cent last year, boosted by the transfer of multi-national companies' assets into Ireland.

Today, the CSO said there was a need to develop a broader suite of domestically-focused figures and information to supplement internationally agreed indicators.

“The small, open and highly globalised nature of the Irish economy makes it increasingly difficult to represent the complexities of economic activity in Ireland in single headline indicators such as GDP or GNP," said Jennifer Banim, the CSO's assistant director general with responsibility for economic statistics.

She said the CSO was conveningan expert group in order to "develop recommendations on how best to meet the statistical needs of national users and provide guidance on the development of indicators that can provide the necessary insights". The group will be chaired by Central Bank Governor Philip Lane and will meet between September and November this year.

Separate CSO figures showed that there was a current account surplus of €4.6 billion in the quarter, a decrease on the €7.5 billion current account balance in Q2 2015, mainly as a result of increased imports of intellectual property.

Davy economist Conall Mac Coille described the modest growth in Q2 ass disappointing, given that a 2.1 per cent contraction in Q1 has been left unrevised. He said the figure seemed "artificially weak" in view of the 1 per cent employment growth over the same period. "There was also an extremely surprising 0.5 per cent fall in consumer spending, which seems hard to credit given buoyant retail sales," he added. Mac Coille said he still believed the underlying rate of GDP growth is closer to 5 per cent and that the recovery accelerated in the first half of this year.

IBEC economist Fergal O'Brien also said a slowdown in consumer spending shown in the figures was surprising, while there were some worrying signs in the relative weakness of the export sector.

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