Growth in Northern Ireland not what it seems


The latest figures for Gross Value Added in Northern Ireland were released yesterday by the Office for National Statistics. Gross Value Added is the closest measure to Gross Domestic Product we have for Northern Ireland, it is equal to Gross Domestic Product plus subsidies and minus indirect taxes. However it is derived from the calculation of National Accounts for the United Kingdom and as such many of the components represent Northern Ireland shares of overall UK activity. None the less it is a key economic indicator used by policy makers and others in determining the health of the Northern Ireland economy. The statistical release from the ONS showed Northern Ireland GVA increasing by 1.2% in 2012. However, this is not the full story.


GVA is presented in current basic prices i.e. taking no account of inflation. While the UK has experienced recession and stagnant growth in the last number of years, inflation has been consistently above its 2% target for much of that time. For this reason it is more accurate to look at "real" changes GVA rather than nominal amounts. Furthermore measuring GVA as a total for the region of Northern Ireland ignores important changes in population. This is being debated at UK level where many economists argue that much of the recent GDP growth in the UK has been due to population growth and when one accounts for this, growth has been far less impressive. For this reason it is better to look at GDP per head of population or in this case GVA per head of population. When this is factored in, we can see that in real terms GVA in Northern Ireland actually declined in real terms by 0.5% in 2012. Moreover GVA per head declined by 1% in real terms over 2012.

Presenting real and per head figures gives a more accurate picture of the Northern Ireland economy and the extent to which it is actually growing or contracting.

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Paul Mac Flynn

Paul Mac Flynn is co-director of the Nevin Economic Research Institute and is based in the Belfast office. In addition to managing the Belfast office he has co-responsibility for the NERI's research programme and for its strategic direction.  

He leads on the NERI’s analysis of the Northern Ireland economy along with all research into the impact of the United Kingdom‘s departure from the European Union. Other research areas include regional productivity, the all-island economy and the future of work.

He is a graduate of University College Dublin with a BA in Economics and Politics and the University of Bristol with an MSc in Economics and Public Policy, specialising in the economic impacts of political devolution in the UK.

Contact: [email protected] or 00 44 28 9024 6214.