The macroeconomic forecasts set out in the Summer Economic Statement were based on preliminary estimates of GDP published by the CSO in March, which incorporated all available information at that time. This is the accepted practice adopted by all forecasting institutions.
The substantial upward revision to the level of GDP in 2015 is largely related to the activities of a small number of large multinational firms and reflects a number of exceptional factors which have limited impact on actual activity in the Irish economy.
The main channels through which these factors affect Irish GDP figures include:
- The effect of 'contract manufacturing' where Irish headquartered multinationals contract the production of goods to third party companies abroad but these products are recorded in Ireland's trade balance;
- The relocation of intellectual property-related assets or patents to Ireland. Ceteris paribus, this will reduce the level of royalty imports and as result increase Irish GDP;
- An increase in new aircraft imports to Ireland for international leasing activities generating substantial fee income without significant employment effects;
A detailed breakdown of the contributions made by each factor is not possible given publicly available data. Also, while it is not possible to identify the exact number of multinational companies that relocated to Ireland it is clear that this revision is largely related to the activities of a small number of large multinational firms in the manufacturing and aircraft leasing sectors.
