THE Irish economy grew by over 7 per cent last year, the highest growth rate in the EU, according to official figures issued by the Central Statistics Office yesterday.
According to the data, Gross National Product, the most widely used measure of economic performance, grew by 7.3 per cent. The GNP figures now exclude all profits earned in the fast-growing multinational sector.
Gross Domestic Product, another measure of economic activity which does not adjust for these profits, grew by a more rapid 10.1 per cent last year, showing the strong growth rate of this sector.
The Department of Finance had been predicting GNP growth of 7.25 per cent with GDP growth of 7.75 per cent.
Mr Dermot O'Brien, chief economist at NCB Stockbrokers, pointed out that for the first time, we have a breakdown of the computer and electrical engineering components". The computer sector grew by 37.9 per cent while electrical engineering grew by 36.5 per cent. "These are extraordinary figures by any standards," Mr O'Brien added.
At the same time, the current account surplus or balance of exports over imports was £850 million, a decrease of £104 million on the 1994 figure and even more significantly down from the high of £1.2 billion recorded in 1993.
However, most of the decrease is due to changes in the way the figures are compiled. The surplus last year would have been at £2.2 billion without the changes. The current account balance has now been in surplus every year since 1990.
One reason for the fall is that net current transfers, mainly EU agricultural and social subsidies less EU budgetary contributions, decreased from £1.4 billion in 1990 to £1.1 billion in 1995.
Overall, merchandise trade contributed most to the surplus, while repatriated incomes and services both fell further into deficit as a result of changes in the accounting method and the growth in multinationals.
Personal expenditure increased by 5.8 per cent last year and Government expenditure by 5.4 per cent. When price rises are discounted, the real increases are 3.7 per cent and 3 per cent respectively. Export volumes rose by 17 per cent, well ahead of a 12.3 per cent rise in imports.
The value of investment in new buildings and capital equipment rose by 10.1 per cent after adjusting for inflation.
The 1995 figures are calculated on a new basis, the net effect of which was to reduce GNP levels.
The main changes in the calculation of Irish growth figures relate to profits and retained earnings of foreign direct investment enterprises, royalty payments for the use of patents and technology and the splitting of international transfers between the current and capital accounts of the balance of payments.
