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Newstalk

08.59 13 Jul 2016


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‘Leprechaun economics’ is the newest phrase in the economic lexicon, following yesterday's extraordinary figures from the Central Statistic Office (CSO).

The Financial Times uses the phrase and notes that the island is "home to some of the world’s greatest works of fiction," and that the reported 26% growth rate in 2016 is "another memorable opus."

The last moniker attached to the country was the 'Wild West' of European economics, which The New York Times called Ireland toward the end of the Celtic Tiger boom.

These growth figures are inflated by aircraft purchases, corporate restructuring, and companies moving assets (particularly patents) to Ireland from other territories.

Assets have come into Ireland through so-called capital inversion deals - and one aircraft leasing company redomicilled its multibillion euro balance sheet.

Nobel Prize-winning economist Paul Krugman coined the phrase 'Leprechaun economics' - it feels like one that might stick.

Mike Egerton / PA

A statement from Finance Minister Michael Noonan following the publication of the figures contained no reference to their inflated nature, he welcomed the strong growth and noted that they will improve the country's "deficit and the GDP to debt ratios."

He added that the improved finances mean, "Peoples’ lives are improving with more at work than at any time since the onset of the downturn. We no longer need to impose swingeing cuts to public services rather we have room to invest in services and infrastructure."

The figures create a problem for the Government who need reliable figures to draw from when preparing the 2017 Budget.

Personal consumption was 4.5% higher - this normally runs about a percent below Ireland's growth rate, suggesting that the real expansion was still impressive and between 5-6%.

While Michael Connolly of the CSO accepts that people are shocked by the sizeable percentage, he stands by the calculations about the state of the nation's economy.

"That's how we understand it," Connolly said.

"We are a very small economy and if we get a big increase in assets, this is what happens.

"We were obviously looking over countries where these sort of numbers occur and they occur when something very dramatic happens or a collection of things comes together."


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