Ireland's Misleading Growth Spurt

Who said euro-area economies aren’t growing fast enough? Ireland has reported a 26.3 percent increase in its real gross domestic product for 2015. No Western country has posted such a rate of expansion in this century, though small but oil-rich Azerbaijan grew 34.5 percent in 2006, when oil prices rocketed. Unfortunately, Ireland’s freak growth has less tangible causes. It is a result of tax shenanigans and a clear indication that GDP increases shouldn’t be considered the ultimate measure of policy success.

“When statistics go bad,” the Nobel laureate economist Paul Krugman commented on the release by Ireland’s Central Statistics Office. Indeed, Ireland is going to jump in the per-capita GDP rankings -- the measure of nations’ relative wealth -- but few people in Ireland would have noticed that last year made them wealthier by more than a quarter. And yet the growth number -- calculated in accordance with the European standard -- is going to have some real consequences, as Finance Minister Michael Noonan said in a glowing statement on Tuesday.