THIS year’s growth forecast is being boosted by accounting anomalies from certain companies, the state’s budgetary watchdog has said.
The Department of Finance has projected growth this year of 4.7pc, but the Fiscal Advisory Council has said gross domestic product in the first half of the year was inflated by so-called contract manufacturing involving possibly just a handful of companies.
This is where an Irish-resident firm contracts a manufacturer abroad to produce a good for supply to a client overseas. The sale of the good is recorded as a goods export, while the contracted production is considered a service import.
The Council said this would have boosted GDP in the first half of the year by about 2.5 percentage points.
“The GDP numbers, this very strong growth that is projected for this year of 4.7pc, has to be taken with more than the usual pinch of salt in terms of indicating as to where the economy is going,” said Council chairman John McHale.
The Fiscal Advisory Council said it wasn’t known which companies are doing this because data provided to the Central Statistics Office is confidential. It also speculated that it was “one or a few” and that it was most likely in the high-tech sector.
The Council said that this showed that there shouldn’t be complacency about growth rates.
The economy grew in the first quarter by 3.8pc and by 7.7pc in the second quarter.
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