First estimates for 2010: Ireland's GDP 25% above EU average

Scofflaw

Based on first preliminary estimates for 20101, Gross Domestic Product (GDP) per capita expressed in Purchasing Power Standards2 (PPS) varies from 43% to 283% of the EU27 average across the Member States.

First figures show that Ireland's GDP per head was 25% above the EU average, compared to the UK's which was 13% above average.

In Spain, Italy and Cyprus, GDP per capita was around the EU27 average, while in France it was around 5% above the average. Germany, Belgium, Finland and the United Kingdom were between 10% and 20% above the average, while Denmark, Ireland, Austria and Sweden were all around 25% above the average. The Netherlands was about one third above the average, while the highest level of GDP per capita in the EU27 was recorded in Luxembourg3.

Greece, Slovenia, Malta, Portugal and the Czech Republic were between 10% and 20% lower than the EU27 average, while Slovakia was around 25% below. Estonia, Hungary, Poland, Lithuania and Latvia were between 35% and 50% lower, while Romania and Bulgaria were around 55% below the EU27 average.

These figures for GDP per capita, expressed in PPS, are published by Eurostat, the statistical Office of the European Union. They cover the 27 EU Member States, three EFTA countries, four candidate countries and three Western Balkan countries.

If you can't read this table, go to this link: http://ec.europa.eu/eurostat/

GDP per capita in PPS, 2010, EU27 = 100

Luxembourg3| 283| Czech Republic|80
Netherlands| 134| Slovakia|74
Denmark| 125| Estonia |65
Ireland|125| Hungary |64
Austria |125| Poland|62
Sweden|123| Lithuania| 58
Germany| 119| Latvia|52
Belgium| 118| Romania| 45
Finland| 116| Bulgaria|43
United Kingdom|113| Norway|179
Euro area (EA17)4| 108| Switzerland| 146
France|107| Iceland |110
Spain| 101| Croatia| 61
Italy| 100| Turkey|48
Cyprus|98|Montenegro5| 40
Greece|89|Former Yugoslav Republic of Macedonia| 35
Slovenia|87|Serbia|35
Malta| 83|Bosnia and Herzegovina|30
Portugal|81|Albania|29


If you adjust for our unusual GDP/GNP ratio (GNP about 82% of GDP), we don't do so well - about 103%. And in GDP terms we've fallen quite a bit:

Ireland’s gross domestic product, a measure of the value of all the goods and services produced, fell to 125pc of the European average in 2010 from 131pc the previous year - and it is expected to fall further in 2011 as real wages continue to fall.

cordially,
Scofflaw

RichardAnd

Ireland has been in Recession now for the better part of three years, has the second highest unemployment rate in Europe, spends about 1/3 more money than it earns every year and yet it continues to come out on top on many polls such as this.

The place is crazy

Cookie_Monster

a measure of the value of all the goods and services produced

so it's so high cos we produce lots of over priced stuff then, right

Fratton Fred

Am I right in thinking that the IP google, Dell, Microsoft etc sell on for huge profits contributes towards Irelands GDP, hence the large figures?

Scofflaw

Fratton Fred wrote: »

Am I right in thinking that the IP google, Dell, Microsoft etc sell on for huge profits contributes towards Irelands GDP, hence the large figures?

Yup - that's why Ireland's GNP, representing the domestic economy, is only 82% or so of GDP (most countries it's c.98%). On the other hand, those companies do pay wages and taxes here, so GNP isn't entirely an appropriate measure either.

cordially,
Scofflaw

PhatPiggins

Fratton Fred wrote: »

Am I right in thinking that the IP google, Dell, Microsoft etc sell on for huge profits contributes towards Irelands GDP, hence the large figures?

Don't forget Phizer, Viagra alone accounts for a large chunk of our GDP.

Nijmegen

PhatPiggins wrote: »

Don't forget Phizer, Viagra alone accounts for a large chunk of our GDP.

They, uh, keep us up.

*gets coat*

Ireland has a major government deficit. It doesn't mean Ireland is poor. It means Ireland doesn't tax enough to sustain its government, or its government is too big.

Raising revenues or cutting government will kill the economy, which is suffering from a confidence crises.

Make no mistake, we're not 'poor' like people in real poverty would understand it.

WalterMitty

So we are only average GNP per capita in OECD so should only pay welfare and public service pay at average levels too.

Sand

Ireland has a major government deficit. It doesn't mean Ireland is poor. It means Ireland doesn't tax enough to sustain its government, or its government is too big.

Raising revenues or cutting government will kill the economy, which is suffering from a confidence crises.

Make no mistake, we're not 'poor' like people in real poverty would understand it.

We're not wealthy either. GDP is essentially meaningless in the Irish sense. Its not even a base which we can reasonably set a tax policy on like other countries. Theres a very real risk up to 20% of that GDP will up and move to the next tax haven should we raise corporate taxes in such a way that makes it more profitable for them to declare their profits elsewhere.

GDP/GNP is not even a measure of wealth, merely income. No one who has visited a truly poverty stricken country would confuse Ireland with one. But equally no one who has visited a wealthy European country would confuse Ireland with one.

Either way, this GDP statistic is going to be repeated around Europe unhelpfully. And its going to be cited by people arguing for continued high spending.

@Walter Mitty

So we are only average GNP per capita in OECD so should only pay welfare and public service pay at average levels too.

No, we have to pay welfare/public service pay at levels we can afford, not at levels our wealthier neighbours can afford. So, despite GNP being average, we may have to end up with spending below the average.

RichardAnd

Sand wrote: »

We're not wealthy either. GDP is essentially meaningless in the Irish sense. Its not even a base which we can reasonably set a tax policy on like other countries. Theres a very real risk up to 20% of that GDP will up and move to the next tax haven should we raise corporate taxes in such a way that makes it more profitable for them to declare their profits elsewhere.

GDP/GNP is not even a measure of wealth, merely income. No one who has visited a truly poverty stricken country would confuse Ireland with one. But equally no one who has visited a wealthy European country would confuse Ireland with one.

Either way, this GDP statistic is going to be repeated around Europe unhelpfully. And its going to be cited by people arguing for continued high spending.

@Walter Mitty


No, we have to pay welfare/public service pay at levels we can afford, not at levels our wealthier neighbours can afford. So, despite GNP being average, we may have to end up with spending below the average.

And this raises a question that could be worthy of a thread to itself; just why are wages so high in Ireland?

Nijmegen

RichardAnd wrote: »

And this raises a question that could be worthy of a thread to itself; just why are wages so high in Ireland?

That one is easy: High growth spurs high wage inflation spurs inflation spurs wage inflation spurs.....

China is dealing with this. Estimates this year say their exports will be 15% more expensive than last year because of wage inflation.

Count Dooku

Scofflaw wrote: »

Yup - that's why Ireland's GNP, representing the domestic economy, is only 82% or so of GDP (most countries it's c.98%). On the other hand, those companies do pay wages and taxes here, so GNP isn't entirely an appropriate measure either.

cordially,
Scofflaw

Not as big as you might think

FDI impact
Ireland has a high level of FDI as a percentage of GDP. 75%, (GNP 85%) compared
to OECD average of 25%, Italy 20%, Spain 35%
Thus our economy is fundamentally different make-up to these countries.
Traditional FDI host countries e.g. Netherlands 85% and Switzerland 65%


Expenditure in Irish Economy
In 2007 spend in Irish economy by IDA supported FDI is €15.9b of which salaries €6.8b, Irish raw materials €2.5b and Irish services €6.6b
Above figures have grown marginally since 2000.

http://www.ija.ie/uploads/downloads/japan_ireland/Irish_Economic_Brief_2009-01.pdf

WalterMitty

RichardAnd wrote: »

And this raises a question that could be worthy of a thread to itself; just why are wages so high in Ireland?

bubble economy combined with bubble tax take and bubble spending and antisocial partnership drove them up to bonkers levels and also drove up price of everything now labour costs are sticky and very slow to adjust to new reality.

Cookie_Monster

Cookie_Monster wrote: »

so it's so high cos we produce lots of over priced stuff then, right

and the figures include over 20 billion borrowed and pumped into the economy that we must take out of the economy

Sand

Sand wrote: »

We're not wealthy either. GDP is essentially meaningless in the Irish sense. Its not even a base which we can reasonably set a tax policy on like other countries. Theres a very real risk up to 20% of that GDP will up and move to the next tax haven should we raise corporate taxes in such a way that makes it more profitable for them to declare their profits elsewhere.

GDP/GNP is not even a measure of wealth, merely income. No one who has visited a truly poverty stricken country would confuse Ireland with one. But equally no one who has visited a wealthy European country would confuse Ireland with one.

Either way, this GDP statistic is going to be repeated around Europe unhelpfully. And its going to be cited by people arguing for continued high spending.

@Walter Mitty


No, we have to pay welfare/public service pay at levels we can afford, not at levels our wealthier neighbours can afford. So, despite GNP being average, we may have to end up with spending below the average.

What's a wealthy country though?

Sand

Deleted User wrote: »

What's a wealthy country though?

Its a tricky one. But we would all consider someone with a lot of assets/capital to be richer than a person with high income.

Wealthy states would be countries that has had decades, even generations of prosperity, and which has invested that into its infrastructure and planning. I remember travelling to Switzerland in 2004 and being stuck by the wealth of the country: in Ireland, things may have been getting "boomier", but the Dublin Airport I left was a wreak, whereas I arrived in a modern airport with a fully functioning rail link to the city. Something visitors to Ireland still dream of. The idea of talking about Switzerland and Ireland in the same breath in terms of wealth is ridiculous.

Belguim was second only Britain in terms of industrial production in the 1830s. Ireland on the other hand was warming up for the famine, and then mass emigration as generation after generation of Irish people voted with their feet and fled first British disinterest/low expectations and then Irish disinterest/low expectations. Belguim is a far wealthier country than Ireland with 150 years or more of economic prosperity.

Meanwhile in Ireland we call ourselves rich because we get 7 or 8 years of high credit inflows which we called income?

Many schools are in an awful state. The transport system is a joke: integrated ticketing is a pipe dream, timetables are at best guidelines and CIE bus often simply dont show up. Weve got a brand new T2 at Dublin airport (overpriced of course), but still no proper rail link to the city center. The water infrastructure is so poor that its estimated that 43% of all drinking water is lost through leaks. Which might actually be a good thing given the people of Galway were getting a healthy dose of ecoli in their drinking water. Irish rail infrastructure is so poor that its a major limiting factor on travel times, to the point where a new rail service was opened not too long ago where the train travel time was slower than the existing bus service.

We are in no way, shape or form a wealthy country. It would take decades of steady prosperity, investment and proper governance to make us a wealthy country. And whatever about wealth, we are closer to Haiti than Helsinki when it comes to proper governance.

Bandana boy

Snippets from a paper I once wrote about GDP as a means of measuring economic well being ,lots of "borrowing" from many other sources in here

GDP
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period
GNP measures the value of goods and services that the country's citizens produced regardless of their location
GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country
GDP substantially higher than GNP in Ireland due to multinational exports

GDP
3 methods of measuring it

Method 1 Expenditure method
Add up all the Expenditure in the economy to get GDP
Is the primarily used method
Is on Final Goods and services (to avoid double counting)
Y = C + I + G + (X − M)

C=Private Consumption
I=Gross Investment
G=Government Expenditure , It does not include any transfer payments, such as social security or unemployment benefits
X=Exports
M=Imports

Method 2 Income method

Add all the incomes associated with GDP
Only income related to production of Goods and service
Exclude Transfer payments
GDP = R + I + P + SA + W
R=Rents
I=Interests
P=Profits
SA =statistical adjustments (corporate income taxes, dividends, undistributed corporate profits)
W =wages

Method 3
Add all the outputs
Needs to be value added output =Selling value less bought in material.
For Public Sector value of output = the cost of the inputs


There is Technical issues and conceptual issues

Technical issues in calculating, i.e. price changes and inflation
Inflation means no change in real output
Monetary change is nominal change adjusted for prices is real change

Issues with distribution
The qty of GDP as an indicator is not enough –think Saudi Arabia and Ireland for distribution
What % of the population is around the average
What % of Growth goes to the population.

Conceptual issues
GDP measures market activity. Goods and services that are produced and exchanged in a market are counted; goods and services that are produced but that are not exchanged in markets are not.Eg Community Work ,DIY,household chores
Over time as we become more prosperous we pay for more G+S so inflate GDP (eg hire a cleaner ,no actual increase in productivity but now hits GDP number)
This problem is especially significant when GDP is used to make comparisons across countries. In low-income countries, a much greater share of goods and services is not exchanged in a market.

Black Market
Some production goes unreported in order to evade taxes or the law.
Leisure
Leisure is an economic good. All other things being equal, more leisure is better than less leisure.
But all other things are not likely to be equal when it comes to consuming leisure. Consuming more leisure means supplying less work effort. And that means producing less GDP. If everyone decided to work 10% fewer hours, GDP would fall. But would that mean that people are actually worse off ?

Regrettables
If Crime increases ,people would increase there spend on security ,assuming they dip into savings instead of replacing other consumption then GDP would increase but is this positive ? An epidemic might have much the same effect on GDP by driving up health-care spending. But that does not mean that crime and disease are good things.
Even if this does not increase GDP a society that spends less on regrettables will have greater well-being at the same level of GDP as one that spends more.
A rise in GDP usually leads to a rise in Crime which again causes GDP to rise.

Assets
GDP does not take into account assets. Even from a standard economics point of view, this doesn't make sense. It is like judging a company based solely on its income statement without looking at the balance sheet.

Often times after a natural disaster GDP goes up due to the economic activity generated by reconstruction. While no one thinks that destroying houses makes good economic sense, GDP does not take reflect whether assets are being increased or decreased and therefore gives an incomplete view of the economy.

Distribution
Money becomes less valuable the more you have of it. A society with a more even distribution of wealth will have a greater level of well-being at the same level of GDP per capita as one that has a less even distribution

Effect of Debt
If spending increases are funded by Debt GDP will increase but is this an improvement ?

Dannyboy83

http://businessetc.thejournal.ie/cso-reports-mixed-bag-for-irelands-growth-162106-Jun2011/

IRELAND’S GROSS domestic product (GDP) grew by 1.3 per cent in the first quarter of this year, but gross national product (GNP) fell by 4.3 per cent, according to new data released by the CSO today

Minister Michael Noonan said the figures were consistent with his department’s projections, according to RTÉ. Noonan called for a boost to the domestic market, saying that people need “to go into the shops and start buying again”.

I find comments such as that hilarious, but I know most people find it infuriating.
I never understand why Finance Ministers say things like that.

Obviously if people are trying to pay down debt asap and suffering from tax increases/worrying about new tax increases, they are going to have less to spend and will be more reluctant to spend what they do have on anything other than necessities.
Fairly basic concept. They must forget not everyone is on a TD's salary, with unvouched expenses to circle the square.

On the bright side, if it actually works, we can eliminate famine in Africa, by simply telling people "you should eat more". Problem solved. Who woulda thunk it?

Finance Minister Michael Noonan has today denied that the domestic economy is in freefall after new figures show continued decline.

"It's not in freefall, but it's flat at the moment," he said.

"We'll see what happens now after the jobs initiative. These are figures for the first quarter, I'd be interested in seeing what'll happen between September and Christmas."

Read more: http://www.breakingnews.ie/ireland/economy-not-in-freefall-insists-noonan-510085.html#ixzz1Q6dBLDg4

How is a 4.3% fall in GNP, regarded as 'flat' ?

I would have assumed things will dip from June onward, as the scrappage scheme is done away with etc.

Count Dooku

Dannyboy83 wrote: »

IRELAND’S GROSS domestic product (GDP) grew by 1.3 per cent in the first quarter of this year, but gross national product (GNP) fell by 4.3 per cent, according to new data released by the CSO today

1.3% + 4.3% = 5.6%

Tax revenues at end-May 2011, at €12.8 billion were €677 million or 5.6% up on the same period in 2010.

http://www.finance.gov.ie/documents/exchequerstatements/2011/mayinfonote.pdf
This is how taxing our way out of recession works