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Economy Watch: view from Dublin

By Dermot O'Leary

Published 29/09/2015

Dermot O’Leary
Dermot O’Leary

Is Ireland's meteoric rise from the ashes over recent years nothing more than a statistical mirage?

The question might seem like a preposterous one that places doubt on the trustworthiness of the Central Statistics Office (CSO), but it is one that arises from the divergence between the macro-economic statistics on the one hand and people's perceptions of their own economic situation on the other.

Let's take a look at the macro-economic numbers. Ireland's economy, as measured by real Gross Domestic Product (GDP), grew by 6.9% in the first half of the year, more than six times faster than the euro area as a whole.

Ireland's large multinational sector is not the explanation here - Gross National Product (GNP), which strips out profits accruing to foreign entities, grew by 6.6%.

In cash terms (including price inflation), the expansion was even more startling, with GDP growing by 12%. If such a feat were to be repeated in the second half of the year, Irish output will have increased by an astonishing €24bn (£17.7bn) in 2015 alone, equivalent to an increase of over €5,000 (£3,695) for every man, woman and child in the State.

Given this, one would have thought that the population would be popping the champagne corks, spending with abandon and smiling from ear to ear.

Not so. While people broadly accept that the country is better off than a year ago, a large majority believe that it has not yet benefited them personally.

One survey suggested that only 15% of people feel that they have benefited. Trickle-down economics appears to be clogged up.

There are important divergences that explain the conflicting results. These apply, among other things, to geography, age, housing tenure and social class.

Take geography. There is little doubt that Dublin continues to be on a different growth plane to the rest of the country. This perception is shared by businesses and consumers alike.

On the former, a survey carried out for Dublin City Council by Markit states that businesses in Dublin have been more confident about the economic situation relative to the rest of the country for every quarter since 2009.

On the latter, a Behaviour and Attitudes survey showed that the net balance of consumers holding a more positive view on the economic situation was six times higher than respondents from outside Dublin.

The capital is All-Ireland champion in more ways than one.

Dermot O'Leary is chief economist with Goodbody

Belfast Telegraph

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