Information Notice - Modified Gross National Income at Current and Constant Market Prices

Following the level shift in the National Accounts in 2015 it was recognised that while the existing high-level aggregate economic indicators such as Gross Domestic Product (GDP) and Gross National Income (GNI) accurately capture and highlight the open and globalised nature of the Irish economy, supplementary indicators are needed to provide greater insight and understanding of all aspects of Irish economic activity, particularly domestic activity.

The Economic Statistics Review Group was convened by the CSO in September 2016 to bring a broader dimension to the deliberations on the challenges of globalisation with the participation of policymakers, analysts, regulators, business and trade union representatives, academics, and the international statistical community represented by Eurostat and the IMF.

One of the key recommendations of the Group was the development of an indicator of the size or the level of the economy appropriately adjusted for globalisation activities that disproportionately affect Irish economic aggregates. The Group focused on Gross National Income (GNI) for this part of its work and recommended the development of the Modified Gross National Income indicator or GNI*.

GNI* was published at current prices for the first time in July 2017 in the National Income and Expenditure Annual 2016 results (NIE 2016).

This information note details the publication of annual GNI* at constant market prices (chain linked annually and referenced to year 2017).

GNI* is designed to be a supplementary measure of the level of the Irish economy and excludes globalisation effects related to highly mobile economic activities that disproportionately impact upon the measurement of the size of the Irish economy. The globalisation effects that are excluded from GNI to estimate GNI* are:

 - Factor income of redomiciled companies

 - Depreciation charged on capitalised R&D service imports and trade in Intellectual Property (IP)

 - Depreciation of the aircraft owned by Irish aircraft leasing companies

The progression from GDP at current market prices to GNI* at current market prices, using the data published in NIE 2018, is shown in Table 1.

While GNI* is designed as a current price indicator of the size or level of the economy adjusted for certain globalisation effects, users are also interested in an indicator of the annual real growth of the economy similarly adjusted. The CSO has investigated the estimation of GNI* at constant market prices (chain linked annually and referenced to year 2017), examining compilation options for the production of robust constant price values for each of the GNI to GNI* adjustments.

For the depreciation of the capitalised R&D service imports and trade in IP and the depreciation of the aircraft of aircraft leasing companies, the constant price estimates are compiled using deflators specific to the asset types in question. For the factor income of redomiciled companies, the constant price estimates are compiled using the GNI deflator as published in NIE 2018.

The results of this work are shown in Table 2 using the version of current price GNI* data published in NIE 2018. Note that for statistical confidentiality reasons we are unable to show the constant price adjustments separately. Also note that due to the nature of chain linking, the constant price or Real GNI* series is only additive from the two sub-component elements for reference years 2017 and 2018.

The data presented here are based on and consistent with the equivalent current price data published in NIE 2018 in July 2019.