Saturday, September 25, 2010

Economics 25/9/10: Accounting for our exports

Quarterly national Accounts offer a rich set of data. Listening to all the talk about turnarounds and Government policies, I wondered -
  • We know that Irish Government has little to do with our exports, which are largely determined by demand outside Ireland over which our leaders have no control;
  • Exports have been performing strongly over the recession
  • Exports, net of imports enter both GDP and GNP figures
So a natural question from my point of view was: "Absent net exports, how badly was our economy hit by the Great Recession?"

Here are the charts, taking our GDP and GNP (seasonally adjusted, expressed in current market prices) and subtracting net exports (exports less imports).
And same in terms of year on year growth rates:
Now, let's put together our growth rates for GDP and GNP ex-net Exports and standard GDP and GNP growth rates (gross of net exports, expressed as before in current market prices, with seasonal adjustments):
To me, this paints a pretty clear picture. Given that the Government has provided virtually no supports for our exporters, the gap between each solid line and each dashed line shows the true extent of net exports contribution to growth in GDP and GNP. And this gap also shows that the economy more directly controlled by the Government has been tanking at a much steeper rate than the economy which includes our exporting firms.

Let's put a cumulative figure to this same picture:
So in those parts of Irish economy where our Leaders had a say (red) we have suffered a decline in domestic income of cumulative 34.35% since 2007. In economy which includes the part which our Leaders have very little control over, the decline was 23.7%. One wonders if there is any truth whatsoever to the leadership claims on economic policy front we've been hearing in recent days?..
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