Growth in GDP - Ireland 1980s

1huge1 · 22-02-2015 6:51pm #1

Hi all

I know this might be the wrong forum, but since this is a historical question, I thought the economics forum might be more helpful.

The recent showing of the RTE Drama Charlie has me thinking about Irish growth in the 80s and the seemingly never ending recession that went on during that period.

However, I found some stats of Irish GDP in the 80s (see below) and noted that only one year (1983) recorded a drop in growth. I'm aware massive borrowing as well as the 1977 giveaway budget led to the stagnation of the 1980s (not to mention the very high rates of tax), how is it with all this going on that Ireland still seemed to have some reasonable growth rates, especially compared to the current climate.

Year Gross domestic product
1980 2.898%
1981 2.513%
1982 1.493%
1983 -0.73%
1984 3.206%
1985 1.947%
1986 0.425%
1987 3.64%
1988 2.997%
1989 5.614%

Thanks to anyone who can enlighten me on this issue.

Atlantic Dawn · 22-02-2015 6:59pm

In 1983 and 1986 the government devalued the punt, that's the reason for the big drops.

1huge1 · 22-02-2015 7:56pm

Thank you for the reply.

I understand that the devaluation of the punt might lead to a short term drop in the growth rate with the hope of increasing it long term due to a rise in exports, but I am still confused as to how the growth rate was relatively good throughout the period despite the country going down the tubes so to speak.

andrew · 22-02-2015 9:33pm

Where'd you get that data? Is it 'real' or nominal? There are a couple of things which I think could be going on. The 80's was around the time when GDP stopped being a very good measure of the 'Irish' economy, and GNP started to be a bit more representative of what it was like on the ground, so there's that - maybe those growth figures are due to export led-hi tech firms, or at least the ones which began arriving at around that time.

i suppose even if there wasn't much of a recession in the 80's, in terms of GDP or GNP, other factors (such as high taxation, and very high inflation) would have contributed to the (accurate) feeling that the economy was performing poorly, which is why those growth figures are surprising (and illustrative of the fact that it's a bad idea to focus on just one statistic when trying to get a feel for how an economy's doing.)

1huge1 · 22-02-2015 10:05pm

andrew wrote: »

Where'd you get that data? Is it 'real' or nominal? There are a couple of things which I think could be going on. The 80's was around the time when GDP stopped being a very good measure of the 'Irish' economy, and GNP started to be a bit more representative of what it was like on the ground, so there's that - maybe those growth figures are due to export led-hi tech firms, or at least the ones which began arriving at around that time.

i suppose even if there wasn't much of a recession in the 80's, in terms of GDP or GNP, other factors (such as high taxation, and very high inflation) would have contributed to the (accurate) feeling that the economy was performing poorly, which is why those growth figures are surprising (and illustrative of the fact that it's a bad idea to focus on just one statistic when trying to get a feel for how an economy's doing.)

It appears to be the real growth rate in GDP. Here is the source

http://www.indexmundi.com/ireland/gdp_real_growth_rate.html

However, I have found other sources which appear to have different statistics.

Definitely interesting to note that despite the country being plagued by massive debt and high taxes in the 1980s that it still managed reasonable growth, (or perhaps not, as it was coming from a lower base so higher growth would of been expected?)

Either way, thanks for the help guys.

andrew · 22-02-2015 10:16pm

1huge1 wrote: »

It appears to be the real growth rate in GDP. Here is the source

http://www.indexmundi.com/ireland/gdp_real_growth_rate.html

However, I have found other sources which appear to have different statistics.

Definitely interesting to note that despite the country being plagued by massive debt and high taxes in the 1980s that it still managed reasonable growth, (or perhaps not, as it was coming from a lower base so higher growth would of been expected?)

Either way, thanks for the help guys.

If you're particularly interested, here's a good book about the Irish economy. It's a fairly readable overview of the Irish economy from about the 40's to now.

It's pretty interesting alright, to see that there were decent growth rates in spite of everything else. Though on the other hand, maybe it's surprising they weren't higher. After all, we had joined the EU almost a decade before, we spoke English, we were relatively well educated, the price level was low (probably) - as the decade after showed, there was no reason not to grow.

02-03-2015 2:55pm

Expansionary fiscal consolidations

http://www.nber.org/papers/w5730.pdf

Controversial topic.

The 1980s experience of 'expansionary' fiscal consolidation has often been cited in defence of Ireland's most recent period of austerity.

1huge1 · 02-03-2015 8:15pm

Thanks for the replies guys, appreciate it

Lostman1990 · 07-03-2015 12:39am

Growth in the labour force could be an interesting area to start looking at.

Growth in GDP - Ireland 1980s

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