Economic Growth

Economic Growth


Economic growth is commonly measured as the percentage growth in Gross Domestic Product (GDP) or Gross National Product (GNP) over a period. GNP differs from GDP by the net amount of incomes sent to, or received from abroad. In an open economy like Ireland, where multinational corporations play an important role (particularly via exports), the difference between GDP and GNP can be significant. This is due to the fact that profit outflows from multinationals can be much higher than income received from abroad by Irish companies.

Would you expect GDP to be higher than GNP? In Ireland’s case, GDP is actually larger than GNP. This is because the net factor income from abroad is usually negative due to the following reasons:

  • Repatriation of profits by companies resident in Ireland
  • Repayments on the foreign elements of our national debt
  • The remittances of immigrants in Ireland sent abroad

Therefore, GDP is a better indicator of the level of economic activity in the country, while GNP is a better indicator of the standard of living in the country.

Note: Data for the Quarterly National Accounts (QNA) which forms the basis of GDP and GNP calculations are collected from a broad range of sources across all sectors of the economy. However, due to the temporary closures relating to COVID-19 and the difficulties faced by all participants in the economy, including businesses, households response rates to various CSO surveys were lower than normal hence the CSO had to rely on estimating some of the data. It should be noted that as better data becomes available, revisions to numbers for 2020 can be expected.

Short-term Trends


GDP v GNP Quarterly  (% change on corresponding period of previous period)

Source: CSO – Quarterly National Accounts

Long-term Trends


GDP increased by 5.6 per cent in 2019, whereas growth in GNP was 3.4 per cent in 2019. As the Irish economy heavily depends on multinational companies, GDP figures may not fully reflect all aspects of Irish economic activity particularly domestic activity. Hence in 2016 a review group recommended that an indicator of the Irish economy adjusted for the globalisation activities to be developed.

As part of this recommendation the CSO developed a series termed Modified Gross National Income (GNI*) and this indicator was published for the first time in 2017. The most recent data shows that in 2018, GDP at current market prices was around €324 billion whereas GNI* was €197.5 billion showing the effect of some of the activities associated with multinational companies, such as research and development service imports, trade in in intellectual property and aircraft leasing.

Economic_Growth_Y_2019

GDP v GNP Annually

 Source: CSO – Quarterly National Accounts