In recent years there were a few things other than the amount of MNC profits in Ireland which have affected world wide web factor income from abroad. We cannot view the first of these results in this week’s release as a depreciation number will never be available until the full-National Income and Expenditure accounts are published in a few months. Outflows of immediate investment income dropped from €59.7 billion in 2015 to €57.5 billion. This could be because of a fall in MNC profits earned in Ireland or an increase in the quantity of MNC revenue consumed by the depreciation of their Irish property.
In the National Accounts, the value of Ireland’s goods exports dropped by around €9 billion in 2016. However, in the custom-based External Trade data the worthiness of the products which were physically exported from Ireland increased by €4.5 billion. The difference arises from the adjustments made for things like contract manufacturing in other countries performed for Irish-resident companies.
As the previous table shows there were €83.2 billion of additional goods exports in the 2015-National Accounts. The preliminary 2016 figures suggest that this fell to €69.3 billion. We have to be careful about inferring the GDP aftereffect of this. And with nominal GDP growing by 3.9 % compared to the 5.2 per cent real growth rate, it is clear there was some price deflation with a lot of the arising on the products trade aspect.
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Nominal goods exports fell by 4.8 per cent but real goods exports only fell by 1.2 %. We sold almost the same level of goods in 2016 as we do in 2015 but lower prices meant the worthiness was almost five % down. But to the higher growth in GNP back again.
There may have been more MNC revenue consumed by depreciation in 2016 but we have no evidence of that (yet). We do have evidence, through the contract manufacturing route, of reduced MNC earnings though there could be offsetting profit increases from their real activities in Ireland. Still, this hint of reduced MNC revenue would suggest that the underlying growth rate of the overall economy in 2016 was above the five % GDP development rate. It is not completely to the nine per cent GNP growth rate, as there is certainly very likely to have been a domiciled PLC impact pushing up GNP.
Inflows of immediate investment income rose from €15.8 billion in 2015 to €18.8 billion in 2016. Some part of this may be increased foreign earnings of Irish MNCs but domiciled PLCs contribute significantly to these inflows. “GDP less online factor income from abroad” to access GNP with the (positive) balance of EU taxes and subsidies used to get to GNI.
