High Irish GDP is an illusion, Ireland is not that rich

techman1

https://www.youtube.com/watch?v=fKmem7Epk8E

A good international viewpoint on the discrepancy between very high irish GDP figures and the fact that a survey has shown that 7 out of 10 young people want to leave the country. They pose the question why would so many young people want to leave such a supposedly rich successful country?

They answer it by saying on paper Ireland is a very rich country we have twice the GDP per capita of countries like Germany and Sweden the industrial powerhouses of Europe, however this is not really the reality. Our GDP is grossly inflated by the global tech companies funneling all their global revenues through Ireland to take advantage of our very low corporation taxes. While we have very high GDP figures the average salaries in Ireland are lower than many of our european compatriots, and is less than half our GDP per capita but in Europe the average salaries are similar to their GDP per capita. Also when other statistics are looked at such as the "average household disposable income per capita" which is the income people have left over after taxes and expenses Ireland is 17th on that list and lower than the EU average. Also the average salaries are inflated by the very high incomes of the skilled tech workers many of them from other countries, however the average salary of people working outside these areas in the domestic economy is much lower

It says that Ireland is particularly bad at building infrastructure compared to our european colleagues, they blame this on government making it very difficult and expensive to build high density accomodation in the cities and too easy for people to object and block these developments. The same for energy and other critical infrastructure, Ireland is very bad at this. Therefore Ireland behind the scenes and flattering statistics is not really that rich.

They pose the question what happens when these global corporations are forced to pay their taxes in other countries and away from Ireland the irish GDP will fall dramatically. Ireland has a very high public debt load but because this is expressed as a percentage of GDP this looks ok because GDP is inflated by global profits of the tech companies. If this GDP were to fall then Irish public debt becomes a big problem

DublinWriter

Totally agree on all points. Our GDP is a 'smoke and mirrors' statistic at this point, caused by the likes of Apple doing the 'double-Irish' trick.

I get the gut feeling that we're in for a very rude awakening in the next ten years.

moon2

That's the reason why the CSO produce the "modified GNI" figures since 2018.

https://www.cso.ie/en/interactivezone/statisticsexplained/nationalaccountsexplained/modifiedgni/

More information here:

https://en.m.wikipedia.org/wiki/Modified_gross_national_income

So... Yes, GDP figures are distorted, and that distortion is mostly eliminated by modified GNI! It's pretty unlikely there'll be a "rude awakening" at any point. Were this money to no longer flow through Irish books then GDP would begin approximating the modified GNI figures again, and we'd probably just stop producing modified GNI stats in addition to GDP stats.

techman1

https://www.boards.ie/discussion/comment/120859440#Comment_120859440

well aware of that but the CSO only came up with that GNI* statistic after being ridiculed by international economists for "leprechaun economics", it hasn't gained any traction anyway as no one else uses this statistic so is no good for comparing the irish economy to international peers as they all use GDP or GNP. Also when the social partners are out with the begging bowl looking for more money, GDP is what they use and sure isn't ireland the richest country in Europe

Wolf359f

https://www.boards.ie/discussion/2058305291/high-irish-gdp-is-an-illusion-ireland-is-not-that-rich

So if Ireland isn't that rich, can you show us on a graph just how poor or non-rich we are?

Ireland, Singapore, Luxembourg, Qatar, UAR etc... all have massive differences between GDP per capita and GNI per capita. It's nothing unique to Ireland.

Modified GNI is just another way to more accurately measure the health of the economy.

Cpxxc

I'm sorry my friend. We are indeed rich, well not me, my bank account has -€5,49 at the moment and no I have no salary resolving that issue in the foreseeable future.

But the country is.

I absolutely don't believe that 7 out of 10 young people want to leave the country. That's obvious nonsense. BS in fact.

Of the young people in my family and extended wife's family only two moved abroad and both because they wanted to. We Irish love to go overseas and come back. 3 of my family. My wife and three of her family and that was when they're were few jobs.

Yes our infrastructure is messed up. But mysteriously we build more houses and apartments every year than the so called homeless figures. So who are moving into these new houses?

The high prices we pay for everything tells us we're a rich country. Because they wouldn't be high if people couldn't afford the prices.

Same with housing.

We do need affordable housing for the ordinary people who quite frankly do all the work to make the money to make this country rich.

That's a big failing. Back in the early sixties. The council in Dublin built modern houses which they sold to people like my parents at a favourable mortgage rate. I'm not sure why that model can't be copied.

Geuze

There are various alternative measures of living standards:

GNI* = modified GNI

MDD, modified domestic demand

AIC actual individual consumption

Geuze

GDP vs AIC per person:

Geuze

This lad on Twitter produces great graphs:

https://twitter.com/jlpobrien/status/1680155971572596736

Geuze

Another good chart:

Cpxxc

Oh Jesus, someone put up some charts.

I suppose it proves we're rich. All I know is that there are two houses on my road on sale for half a million each and the people coming to see them are driving expensive cars.

That's rich.

I live in Galway BTW not southside Dublin. Where I grew up poor.

This country is rich. Get over it.

Padre_Pio

https://www.boards.ie/discussion/comment/120861083#Comment_120861083

The country is rich. I'm not saying the figures are accurate, but GDP, GNI, gross exports etc all put Ireland top of the charts. Aside from a massive housing problem, and ongoing healthcare issues, Ireland is a fantastic place to live.

I'm skeptical of the 7 in 10 figure, though I know plenty of people who have left Ireland to travel for 3 or 6 months and were 100% confident they could easily pick up a job on return.

If that's not a measure of success then I don't know what is.

Peregrinus

None of this is news; we've known for a decade or so that Irish GDP figures are distorted and can't be compared with the GDP figures of most other countries.

Ireland isn't unique; this is a common feature of economies that are overweight in financial services, that have high levels of external investment or that are tax-driven. The chart posted by Geuze in post #8 shows similar anomalies with Luxembourg, Norway and Switzerland and there would be other countries, not on that chart, similarly affected.

As long as you recognise what's happening and what GDP figures do and don't show, it isn't a problem.

Podge_irl

The amount of young people wanting to leave Ireland is as much a reflection of geography and demographics as anything else. Ireland is a small country and young people will often want to move somewhere larger and its particularly easy to move to other anglophone countries.

techman1

https://www.boards.ie/discussion/comment/120861063#Comment_120861063

On that basis "actual individual consumption " we are the same as poland, Hungary, Spain and Italy. That would seem to match the reality of people's lives because accomodation and living expenses and taxes are so high in Ireland. Therefore even with relatively high wages irish people don't have the purchasing power of our northern European neighbours

Fred Cryton

While GNI* better measures individual income, GDP cannot be ignored as the country benefits by taxing that additional GDP (for example, corporation tax on intellectual property).

Best way of looking at it is that we have similar disposable income to countries like Germany and Sweden, but we also have something they don't, which is a chunk of additional GDP we can tax and benefit from which over time could indeed make us properly wealthier than those countries. Provided we use it wisely of course.

listermint

https://www.boards.ie/discussion/comment/120861999#Comment_120861999

The shops, full restaurants, home renovations and multiple holidays disagree entirely with your sentiment. That and diminishing credit debt.

I don't know why People can't accept that people are actually quite well off. But we have inbuilt infrastructural problems I'm areas due to successive self interest bad government policies.

Padre_Pio

https://www.boards.ie/discussion/comment/120862249#Comment_120862249

70% of adults are homeowners. If you own your home, have a job and have relatively good health then you're likely very well off.

techman1

https://www.boards.ie/discussion/comment/120862249#Comment_120862249

We have less disposable income than our Northern European neighbours, that's been captured in the statistics shown above. While there maybe full restaurants and holidays abroad that's more a function of people wanting to socialize and travel following the covid lockdowns, that's a Europe wide phenomenon.

However our housing and infrastructure deficits are much worse than the rest of Europe and this results in increased costs for everyone. The Irish state, the government sector is the problem, look at the cost over runs in children's hospital construction. The state is obviously trying to put the blame on BAM the contractor. However BAM is an international developer with many successful international infrastructure developments under its belt, why is the Irish one in such a mess?

The government rather than building infrastructure prefers to throw money out to people through increased social welfare and child benefit payments. This acts as a disincentive to work and reduces the available workforce to work in those hospitality jobs and on the building sites building houses and infrastructure

beggars_bush

Irish households have huge levels of deposit savings and that has been growing since covid.

There's a lot of money in the economy waiting to be spent

NIMAN

Figures on both sides of this argument need to be taken with a pinch of salt.

Is our GDP inflated by a few companies? Yes it is, and it's something we need to prepare for in the medium to long term as they might not always be here.

Do the vast majority of young people want to leave here? No, they don't. The vast majority of Irish youngsters stay in Ireland.

WesternZulu

The ERSI recently published a report using modified GNI that put us at a similar standard of living as Germany and ahead of the UK.

We recently came second in the UN quality of life index.

By any objective measure Ireland is a rich modern country. However all countries have their issues; Ireland isn’t unique either in having a housing problem at the moment.

Sam Russell

I think that there is a difference between being RICH and being WEALTHY.

A rich person has access to money - plenty. A wealthy person is not measured by money but assets - most of which are not valued in money terms.

Think - 'nouveau riche' vs 'old money'.

coolshannagh28

High GDP nay be skewing the numbers on the levels of wealth in Ireland but the longer the tax take and huge surpluses from MNCs continues the wealthier we will become as is already becoming apparent in this particular cycle.

Strumms

We owe roughly 237 billion euros.

So, the State's national debt now stands at roughly €44,000 per person in the country, one of the highest per capita debt burdens in the world.

Podge_irl

https://www.boards.ie/discussion/comment/120864469#Comment_120864469

1. So what?
2. We're behind most of Western Europe regardless

I don't know what your obsession with this figure is, but its meaningless.

wotzgoingon

https://www.boards.ie/discussion/comment/120864469#Comment_120864469

Sure America who would nearly be one of the wealthiest countries in the world have massive debts also.

Stephen_Maturin

https://www.boards.ie/discussion/comment/120861055#Comment_120861055

I’m a (relatively) young person (27) and I’d say 7/10 figure is about right.

I’d reckon it’s about that proportion of my friends that have emigrated in the last couple of years or are actively preparing to leave in the next 6 months. And that’s across several different friend circles from school, college, cousins, ex colleagues etc

It’s an extremely common sentiment amongst young professionals in Ireland at the moment. A real feeling of frustration and no viable future.

Can have done everything “right”, worked your ass off etc and you’re still no closer to the realistic possibility of buying a house and starting a family likes generations before.

Unfortunately there also seems to be a real lack of empathy out there from older generations, which doesn’t help. A lot of those people that've left already, highly educated and motivated Irish young people, are never coming back to Ireland. Which is sad.

Podge_irl

https://www.boards.ie/discussion/comment/120864587#Comment_120864587

Can have done everything “right”, worked your ass off etc and you’re still no closer to the realistic possibility of buying a house and starting a family likes generations before.

How many of them are moving to England were this is just as true though?

combat14

there may be some money in the country but the infrastructure save a few motorways is an absolute disgrace .. head over to somewhere like bilbao for example in the north of spain and there is no comparison many dublin or cork street merely inches from the main streets are literally crumbling and with the latest childrens hospital 2 or 3 billion euro Blank cheque fiasco there doesnt seem to be any hope to improve our position going forward!

WesternZulu

https://www.boards.ie/discussion/comment/120864623#Comment_120864623

It’s like anything, it’s very easy admire something from afar when you don’t live there.

A sibling of mine lived in Spain. If you think Ireland is corrupt, Spain is in a different league.