Meeting 24

Macroeconomic Statistics Liaison Group Meeting

Minutes

1. The Annual National and International Accounts for 2023Q3 were reviewed, following their publication on Friday 1st December 2023.

   The run of consecutive quarters of negative GDP is largely due to the seasonal adjustment factor. Seasonal patterns are evident in the Modified Domestic Demand (MDD) series, which tracked COVID well. The CSO Methodology team checks the seasonal adjustment models quarterly, which are in line with best international practise. 

   2024 is a benchmark year – every five years, Eurostat coordinates harmonised benchmark revisions across the European Statistical System to incorporate new data sources and major methodological changes. This ensures maximum consistency within and between national accounts domains for the longest possible time series; across EU countries; and with Balance of Payments statistics. While the CSO policy is to revise annually, additional benchmark revisions will go through in 2024. These will be announced in advance.

   The volatility in industry data is driven by restructuring and offshoring activity by multiple large MNE groups during 2022 and 2023. This resulted in both a reduction in physical exports, along with large volumes of contract manufacturing moving outside the EU. Some of this offshoring has a GVA effect, and some does not: in some cases where output has reduced, intermediate consumption has also reduced accordingly. When the COVID effect from 2022 is removed, the 2023 results continue to show the strong industry growth trend of the last four to five years.

2. Peter Culhane, a statistician in the National Accounts – Analysis & Globalisation Sector Accounts division, presented an overview of the data sources and methodology used in the compilation of the Non-Financial Institutional Sector Accounts, along with some key outputs and findings. 

   The institutional sector accounts draw on a wide range of sources, including many that are used in the compilation of other CSO statistics. The non-financial accounts are based on, and are largely consistent with, the Annual National Accounts (ANA) and International Accounts. The sector accounts comply with the revised European System of Accounts (ESA2010) methodology to ensure greater international comparability. Non-financial corporations (S.11) are sub-divided into Large foreign-owned MNEs (S.11a) and Other (S.11b) in the annual Sector Accounts. This sub-division is not prescribed in ESA2010, but is an additional level of detail provided because of the nature of the Irish economy, and is a step towards the full separation of domestic and foreign-owned corporations to allow a more informed perspective on the purely domestic economy. 

   The Sector Accounts include 'Domestic GNI', an alternative measure of the economy based on Gross National Income. Domestic GNI is the sum of the Balance of Primary Incomes of Government; Households and NPISH; and both financial and non-financial domestic corporations. The Balance of Primary Incomes of foreign-owned corporations (S11a and S12a) and redomiciled PLCs (S11c) are consequently excluded. Domestic GNI is lower than GNI* because it excludes the Balance of Primary Incomes (and hence all CFC) of S11a and S12a, not just their CFC on IP and aircraft. Domestic GNI includes the CFC of domestic sectors, and so is more complete than NNI. This also has the advantage of excluding the Balance of Primary Incomes of Redomiciled PLCs, which is almost entirely made up of their investment income from the rest of the world. However, by excluding the entire Balance of Primary Incomes of foreign-owned corporations, the taxes they pay on income and wealth are excluded, most importantly corporation tax. These taxes have not been deducted at this stage in the sequence of accounts. Since this money is used by the Irish Government to provide public services, excluding it is taking out a significant transaction that affects the domestic economy.