The standard international measure of economic activity is Gross Domestic Product (hereafter ‘GDP’), which measures the total value of goods and services produced in an economy during a particular period.
When the European Council reached agreement on the Multi-annual Financial Framework 2021-2027 and Next Generation EU Recovery Instrument, last July, the Government supported the use of the allocation key for the Recovery and Resilience Facility, including GDP-related elements, as the best possible outcome within the broader political agreement. GDP is frequently used as a reference point for EU budget expenditure policy.
The Department of Finance frequently highlights the shortcomings of GDP as a measure of living standards and of the debt-to-GDP ratio as a measure of the debt burden. Now that the modified GNI measure is available, the Department also supplements the Government’s European budgetary requirements (when submitting the Stability Programme Update and Draft Budgetary Plan) with estimates and projections of modified GNI and debt-to-modified GNI. However, it should be kept in mind that this metric is designed specifically for the Irish economy and is not based on internationally-agreed methodologies.
Furthermore, officials in my department regularly analyse potential measures of economic growth that better reflect social and economic well-being across Irish society. These include standard measures such as GDP, but also alternative statistics developed to more accurately reflect the domestic economic situation, such as GNI* and modified domestic demand. More specific indicators which nonetheless relate to the economy as a whole are also closely monitored, for example employment, private consumption, and investment.
My Department is also a joint sponsor of the cross-government initiative called The First Report on a Well-being Framework for Ireland. This Report, published on 6 July this year, aims to advance the holistic measurement of well-being in Ireland. Over time, this framework is intended to provide a more well-rounded view of our society’s well-being, reflecting both social and economic well-being. The Report details the first phase of this ongoing work can be found on the gov.ie website.
