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.

Short-term Trends


Economic_growthQ22019

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

Source: CSO – Quarterly National Accounts

Long-term Trends


Final estimates from the Central Statistics Office show that GDP increased by 8.2 per cent in 2018, whereas growth in GNP was 6.5 per cent in 2018. Growth momentum continued in the first quarter of 2019 where initial estimates indicate that there was an increase of 6.3 per cent in GDP in real terms in Q1 2019 compared with Q1 2018. (Note that quarterly economic growth data gets revised significantly in each quarter).

Economic_Growth_Y_2018_2

GDP v GNP Annually

 Source: CSO – Quarterly National Accounts