Irish Economy: The ESRI (Economic and Social Research Institute), the publicly-funded independent think-tank, today forecasts GDP (gross domestic product) growth of 1.8% in 2013 and 2.7% in 2014, but behind the headline figures is a grim outlook with a reliance on tax-related services exports, emigration and an acknowledgement that research shows the economy contracted more in recent years than was suggested by the official data.

Last month end, the Department of Finance forecast GDP growth of 1.3% in 2013 and 2.4% in 2014.

The ESRI says in its latest Quarterly Economic Commentary [pdf- summary] that forecasts are based on the assumption that the European economy returns to growth in 2014. In recent years forecasts for economic growth in Ireland's main trading partners have been revised downwards. "If the anticipated international upturn does not occur, then the outlook for the Irish economy is less positive than we have forecast in this Commentary."

The ESRI estimates that net emigration will be at 32,000 people this year and a further 22,000 net will leave in 2014. 316,000 people or 14.7% of the labour force were jobless in 2012.

Overall, the economists forecast the labour market will improve in 2013, with the annual rate of unemployment falling to 14.2%. "Looking ahead to next year, we expect continued emigration to reduce both the level of unemployment and the size of the labour force, with the unemployment rate falling further to below 14%."

The International Monetary Fund said in a report last month that the broad rate of Irish unemployment was 23%:

"Since the recession started, employment has fallen by 15½%, pushing the unemployment rate close to 15%, the share of workers unemployed for over 1 year to 60%, and the share of very long-term unemployed (over 2 years) to 30%. If involuntary part time workers and workers only marginally attached to the labour force—two groups that registered significant increases—are also accounted for, the unemployment and underemployment rate in Ireland stands at a staggering 23%."

The ESRI recognises an anomaly in the CSO's Quarterly National Household Survey (QNHS) for the Fourth Quarter of 2012 the report of a rise in agricultural employment: "Excluding agriculture entirely, the annual fall in total employment for the fourth quarter of 2012 was 10,600 on a seasonally adjusted basis...The continued underlying fall in non-agricultural employment is a less encouraging finding than the main results suggest."

Richard Bruton, jobs minister, in recent months has been highlighting that the Irish private sector added 12,000 jobs last year. However, the QNHS data [pdf] also shows that private sector jobs classified as 'Self employed/Assisting relative' grew by almost as much, which given the state of the economy, hardly indicates success. Part-time jobs in the whole workforce grew by 13,000.

However, computer services or the two business services categories in 2012 services exports, did not jump by 15% and 13% because of FDI inflows. The facts show that these surges are tax-related.

I sent an email to David Duffy on Tuesday and copied it to Prof Frances Ruane, ESRI director. I did not get a reply.

David,

I will not be able to attend tomorrow's press briefing as I am based in Kuala Lumpur.

However I hope that there will be more honesty than what's forthcoming from elsewhere, about the surge in tax-related services exports resulting from revenue diversions by US companies such as Google, Apple, Microsoft and Facebook.

Official claims that the result of Google diverting almost 50% of its revenues to Ireland reflect competitiveness are lies and against the public interest.

Google's global web revenues grew by 29% and 21% in 2011 and 2012 respectively. When the Google Ireland's 2012 accounts will be published this year, they will show revenues of at least €15 billion or 41% of Irish computer services in 2012.

Google, Microsoft, Apple, and commercial aviation leasing, employing about 6,500, account for 52% of Irish services exports.

A surge in headline exports but full-time employment in exporting sectors lower than in 2000 is the reality on the ground.

I see that John FitzGerald has determined that the GNP decline has been understated in recent years. In 2002, it was only possible to report GDP growth because of accounting transactions at US multinationals.

ESRI's FitzGerald says Irish GNP and Current Account surplus overstated

A budget deficit of 7.2% of GDP is forecast in 2013 and 4.6% in 2014.

The Anglo Irish Bank promissory note deal is expected to save the Exchequer about €1bn in 2014.

Public spending will be €69.6bn this year and €67.8bn in 2014 compared with €68.8bn in 2012; revenues are estimated at €57.5bn in 2013 and €59.8bn in 2014.