Politicians and the media say that a land of milk and honey is just around the corner. The Independent claims that “We’ll thrive for a decade”. Apparently Gross Domestic Product (GDP) will grow by 5% this year and 4.2% next year. One estimate puts Gross National Product (GNP) growth as high as 9%.
We know how the government is inflating job statistics to make themselves look better: accounting tricks, emigration, lower-paid jobs, jobbridge-type scams. They’re doing the same thing with economic growth.
Imagine you work for a US-owned company and half the profits are sent back across the ocean. Every cent of those profits, even if it’s sitting in the back pocket of some American shareholder, still gets tacked onto Ireland’s GDP.
GNP is just as dodgy in its own way. Many companies have their head office here so they can dodge tax. Their retained profits get stuck on top of our GNP, even though the economic activity may be happening thousands of miles away.
Using GDP and GNP figures to prove that there’s a “boom around the corner” is like basing an entire weather forecast on a single broken thermometer. Other indicators, such as income tax receipts, the Purchasing Managers’ Index and consumption levels, give a mixed impression but overall don’t back up what the growth rates seem to say.
Low pay and unemployment mean that the demand driving all the building work may dry up. Outlook for the world economy, and so for Irish exports, is grim. When there is growth, its benefits mostly get gobbled up by debt or, in our neo-liberal economy, by the wealthy.
Put the hyped-up growth figures in context. It doesn’t add up to the picture they’re painting of spectacular growth that will undo all the devastation caused by austerity policies. It looks like a weak recovery, from a low level, with a limited basis, after a half-decade of decline and stagnation.