Ireland to phase in new way of measuring economic growth

DUBLIN, Feb 3 (Reuters) - Ireland will modify how it measures gross national income to gauge the true health of the economy after recent revisions made recognised data points problematic, the state’s statistics office said on Friday.

The relevance of using gross domestic product (GDP) to measure Ireland’s highly open economy was called into question last July when growth for 2015 was adjusted up to 26 percent after a massive revision to the stock of capital assets.

The adjusted gross national income (GNI) measure, which will be phased by the end of 2018, will exclude the depreciation attributable to relocated capital assets and the impact of re-domiciled firms, the Central Statistics Office (CSO) said.

“When you are confronted with data which have limited possibilities in terms of interpretation, it’s important to supplement that,” Irish Central Bank Governor Philip Lane, who chaired the group that proposed the changes, told a news conference.

U.S. economist Paul Krugman dubbed last year’s GDP revision from an original growth estimate of 7.8 percent “leprechaun economics,” much to the annoyance of Ireland’s government which has overseen a recovery revered around Europe.

A swath of secondary numbers, from unemployment to retail sales and business surveys, point to a sharp recovery and back up the record that by GDP, Ireland’s economy has been the best performing in the European Union for the last three years. (Reporting by Padraic Halpin; Editing by Tom Heneghan)