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

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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).

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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.

Show Table: Table 1. Modified Gross National Income (GNI*) at Current Market Prices

Figure 1 below shows GNI and GNI* at current prices and highlights how the adjustments for globalisation activities become significant from 2015 onwards.

X-axis labelDepreciation on R&D service imports and trade in IPFactor Income of redomiciled companiesDepreciation on aircraft leasingGross National IncomeModified Gross National Income
2010-4.1567779978844-5.26-2.1631681321721140.5396451371128.959699007043
2011-4.1669313244067-5.548-2.4252317197239138.4977568711126.357593826969
2012-4.8099355698589-7.09733673-2.7554222649346141.1607717438126.498077179006
2013-5.0861924081958-6.47375948-3.0596956549538151.5788017962136.95915425305
2014-5.0827437379438-6.851084976-3.78271035417164.454468045148.737928976886
2015-30.109408043569-4.662566246-4.606168377493202.0344053241162.656262657038
2016-35.316240468324-5.78006588-4.8685042871715221.5954654708175.630654835305
2017-42.470692723443-4.456802568-5.0684714689421235.9511716449183.955204884515
2018-46.303293781021-5.001009765-5.4184857281989254.1827494558197.45996018158

Figure 2 below compares three national income measurements - GNI, GNI* and Net National Income (NNI) at current market prices, illustrating the 2015 level shift in the GNI indicator due to globalisation activities related to relocations of IP and activities of the aircraft leasing sector and the more limited impact of the globalisation activities on the GNI* and NNI indicators.

X-axis labelGross National Income (GNI)Modified Gross National Income (GNI*)Net National Income (NNI)
2010140.5396451371128.959699007043116.664741507948
2011138.4977568711126.357593826969114.887979138659
2012141.1607717438126.498077179006116.019206763021
2013151.5788017962136.95915425305125.040207677298
2014164.454468045148.737928976886135.771492308379
2015202.0344053241162.656262657038145.701192759706
2016221.5954654708175.630654835305157.83966915645
2017235.9511716449183.955204884515162.87565555823
2018254.1827494558197.45996018158174.914839069361
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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.

Show Table: Table 2. Modified Gross National Income (GNI*) at Constant Market Prices (chain linked annually and referenced to year 2017)

Figure 3 below shows GNI and GNI* at constant prices. 

X-axis labelGNI at constant market pricesGNI* at constant market prices
2010162.2982081174150.38659296544
2011156.7570357408143.94144015623
2012156.7249265683141.59752513503
2013165.5244375466150.71242331503
2014179.9834231783163.91173125577
2015204.5619953732163.20055424746
2016224.4033092407177.33904128776
2017235.951171645183.95520488457
2018251.1858771555195.5824136766

We can see in Table 3 below that while in most years the growth rates for Real GNI and Real GNI* are quite similar, they are very different in 2015 due to the significant globalisation effects that drove the 2015 level shift and the GNI to GNI* adjustments in that year.

Show Table: Table 3 Year-on-year percentage changes in GDP, GNI and GNI* at constant market prices (chain linked annually and referenced to year 2017)

Central Statistics Office

July 2019