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_Growth_Q2_2018

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

Source: CSO – Quarterly National Accounts

Long-term Trends


Preliminary estimates indicate that GDP in volume terms increased by 7.8 per cent for the year 2017. It is likely that Irish economic growth in 2017 will have outpaced the average EU growth rates in 2017 once final estimates are published, making Ireland the fastest growing economy in the EU in the past 5 years.

Value added has increased in all of the main sectors of the economy, however main contributors to the growth in GDP in 2017 were Construction, Information and Communication and Professional Admin and Support sectors, with 16.8%, 16.8% and 10.8% growth, respectively.

Economic_Growth_Y_2017

GDP v GNP Annually

 Source: CSO – Quarterly National Accounts