Despite all indicators pointing towards an improving economy over the past year, there is no simple way of measuring that progress due to the distortive effects of a number of large industries and definitional changes.
One of the country’s most respected economists and ESRI research affiliate, John Fitzgerald, is due to make the claim as part of a wider report released next week.
Prof Fitzgerald argues that relatively new developments such as the impact of the pharma patent cliff have had major implications for the interpretation of the Irish national accounts.
The inclusion in the national accounts later this year of aircraft leasing activities which will see purchases of aircraft in the sector booked under imports on a comprehensive basis will further complicate the situation.
Finally, the activity of a small number of firms re-domiciled here is also distorting the figures for Gross National Product (GNP) and the current account of the balance of payments.
Consequently, GDP is a defective indicator while GNP — although superior — is also imperfect.
A new method of evaluating growth which focuses on identifying the GNP of individual sectors should be adopted, Prof Fitzgerald added.
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