Monday, July 6, 2009

Economics 06/07/2009: Irish Economy Exclusive

I've crunched through some Eurostat data on GDP/GNP and here are some interesting illustrations of where we are at and where we are heading next.
First off, chart above shows where we are at in terms of GDP and GNP per capita, prices-adjusted, relative to the Euroarea and EU27 averages. The GNP line clearly breaches EU15 and Euro area average line in 2009, so by 2010 we will be income-poor of the bunch. A bit more countries to compare against below:
Again, the number of our advanced peers that will surpass our income per capita in GNP terms is frightening. The same holds for major OECD economies - puts that international crisis into perspective...
And the US dynamic is worth a story here as well - all the EU convergence myth is clearly visible. But remember the hype that the Irish Times loves selling us: "Ireland as the wealthiest economy..." stuff that is designed to make us feel somehow better when parting with our taxes...
To me the above chart is really telling. This is the gap between what we are made believe and where we really are.

Two more charts. First, GDP and GNP forward using Eurostat projections:
And now the GAP: Anyone needs a better illustration of the 19th century domestic economy pitted against a 21st century MNCs-led economy? They don't tell you this in investor presentations, do they?

And here is a good post from a student of economics on the topic...


Fiscal Student said...

Nice article, I wrote a short piece a while back about how GDP for Ireland doesn't give an accurate picture due to presence of MNC

MK1 said...

Hi again Constantin,

There are problems with both GDP and GNP for measuring our economy and that of many others, including using a GNP PPP (purchasing power parity) figure.

What is clear is that Ireland's economy is correcting and sharply. And so far we have not taken enough corrective actions to stop the rot.

People will need to work at different things, and this change will be slow and painful and costly on many levels. We have to be a lot more inventive,innovative and work harder. And we cant borrow to pay workers in the Public Sector nor those on social security.