Does Ireland have the fastest growing economy in the Eurozone?

CLAIM: Ireland has the fastest growing economy in the Eurozone.

CONCLUSION: ACCURATE. According to the most recent annual figures, Ireland has the highest annual rate of GDP growth (both as an absolute figure and if adjusted for the size of population) of the 19 countries in the Eurozone. However, Ireland is ranked lower if other economic measures, such as Gross National Income are considered.

The Institute of Irish Studies at the University of Liverpool has produced two videos as part of its Civic Space initiative that present both pro-Union and  pro-unification arguments. This fact check investigates a claim in the pro-unity video (at 2:02), that states, “Ireland has the fastest growing economy in the Eurozone.”

The ‘EU19’ eurozone area is an economic and monetary union (EMU) which includes 19 of the 28 European Union member states that have formally adopted the euro currency. Those countries include: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

What do we understand by “fastest growing economy”?

Gross domestic product and gross national income are two ways of measuring economic growth in a region.

Gross Domestic Product

Gross Domestic Product (GDP) is the total value of all goods and services produced in a country. Eurostat, the statutory statistics agency of the European Union, compiles data from member states in a published bulletin.

Looking at Eurostat’s annual statistics on GDP for 2020, within the EU19 countries, Ireland had the highest annual rate of GDP growth (2.9%). The next highest rate was for Luxembourg (1.0%), followed by Lithuania (marginally over 0.0%); the remainder of the EU19 countries had negative growth rates for 2020.

As figures for 2020 were substantially affected by responses to the pandemic, we can usefully examine the statistics for the previous year. In 2019, Ireland still had the highest rate of GDP growth (8.9%), closely followed by Estonia (8.4%) and Malta (8.0%).

Taking account of population size, in 2020, Ireland still had the highest rate of GDP growth per person (1.8%), down from its rate of growth in 2019 (7.4%), which was third among the EU19 countries.

Gross National Income

Gross National Income (GNI) is another measurement of economic activity. It subtracts income that leaves the country (for example, back to a multinational company’s home country) and adds income from resident companies in the rest of the world.

GNI can be adjusted for Purchasing Power Standards (PPS) to eliminate differences in price levels in comparisons between countries.

Looking at GNI per person (in PPS) in 2019 (most recent data; no data for Finland), Ireland ranked 11th in growth (2.8%); Estonia, Lithuania, and France had GNI per person growth rates above 5%. In 2017 and 2018, for example, Ireland ranked 7th (5.0%) and 5th (5.4%), respectively.

Some argue that even GNI overstates Ireland’s economic performance, and suggest using a Modified GNI (GNI*) measure which compensates for the effect of profit shifting. Substituting Ireland’s GNI figure with a GNI* figures pushes Ireland down the list of comparative economic performance.

Summary

In general, claims about the economic rates of growth depend upon the time interval (quarterly, yearly, etc.), the time period (2020 or 2019), the measurement used (GDP/GNI), and whether absolute or adjusted for population size.

The Institute of Irish Studies video is correct that according to the most recent annual figures, Ireland has the highest annual rate of GDP growth (whether measured overall or per person) of the 19 countries in the Eurozone. However, alternative measurements of economic activity may rank Ireland lower within the Eurozone.


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