IRISH GDP HAS, at this point, essentially become an oxymoron.

GDP (gross domestic product) measures the value of all the final goods and services produced by a country.

For most countries, it paints a reasonably accurate picture as to the size of their economy, and whether it is growing or shrinking.

It is the standard figure used by most international bodies, such as the International Monetary Fund (IMF), World Bank, OECD and European Commission.

GDP is usually used as a proxy for economic success. Up = good. Down = bad.

The figure also doesn’t tend to have dramatic movements. Annual increases or decreases of more than about 3% or so are normally rare.

The system works well enough for most countries. But not for Ireland.

Recent figures showed that the GDP for the euro area dropped by 0.2% during the first three months of 2026 compared to the same period in 2025.

Most nations recorded changes of 1% or less. In Ireland, we recorded a drop of 12%. It was a much more dramatic movement than predicted – analysts had projected a decline of just 2%.

The movement was so large that it single-handedly moved the entire euro area from growth into contraction – albeit the small one of the already-mentioned 0.2%.

Why does our GDP move so much?

Here, the figure is hugely distorted due to the activities of multinational companies.

For example, as covered previously, Ireland is a popular destination for corporate profit-shifting. Big companies move lots of money through here for several reasons, including minimising their tax bills. In return, Ireland gets a cut of their international profits, an arrangement which has seen our corporate tax revenue surge.

A side effect of this is that all this money being moved around is counted as part of our GDP – even though it has very little to do with the underlying ‘real’ economy.

These multinationals move enormous profits and Ireland is a relatively small country. Therefore, the activities of just a few businesses can have an enormous impact on our GDP.

This is an issue which economists have been well aware of for over a decade. It first attracted international attention in 2015, when Ireland recorded GDP growth of 26% in a single year. This kind of movement simply does not happen in developed countries.

OK, so GDP isn’t a good number for Ireland, got it. What has been done about it?

Quite a bit.

The likes of the Central Statistics Office have created new figures to try to measure how the economy is actually performing. Perhaps the most important of these is ‘Modified Domestic Demand’ (MDD), which has been steadily expanding at a much more sustainable pace compared to GDP.

This is all well-known by researchers and academics. Various reports mention that Ireland’s GDP is ‘over-inflated’ and does not accurately measure ‘real’ economic activity.

Five years ago, the Central Bank published a report on why rankings hailing Ireland one of, or the richest countries in Europe were misleading. In short – because they tend to rely on GDP.

So it can be very wearying to see international datasets and rankings still putting Ireland near the peak based on GDP.

An excellent example came up just a few weeks ago, when multiple headlines trumpeted that Ireland was set to become the ‘richest country in Europe’ by 2030.

Again, this was based on GDP. This time, the IMF looked at GDP per capita while adjusting for PPP (purchasing power parity).

These headlines about Ireland apparently being extremely rich then do the rounds on social media, often being seen and shared by enormous numbers of people.

Stats boffins then come in later muttering about ‘GDP distortions’, long after a misleading impression has been created.

You could argue that particular example was an issue with a media headline, rather than with the IMF’s original reporting.

But the fact is that the IMF included Ireland at the top of a set of rankings which it went to some effort to compile, seeing as it bothered to adjust for PPP.

This gives its rankings some weight, so it’s perhaps unsurprising that people would get excited when Ireland topped them.

This leads to an obvious question – if GDP is causing this many problems, why not replace it?

GDP was dreamt up decades ago. It came from a time when economic activity was usually linked to factories and farms. It was designed before multinationals moved money across the globe in the way they do now.

And while Ireland’s GDP is perhaps most famously skewed, we aren’t the only country this happens to. Luxembourg also suffers from similar problems, being a small country with lots of multinational activity. The same goes for the likes of the Netherlands and Singapore, although the effects are less extreme.

If there are all these problems with GDP, why don’t countries use some version of Ireland’s MDD instead?

There have been attempts to do this. Perhaps the most notable is an indicator called GNI (Gross National Income), which attempts to measure economic activity while removing the impact of multinational businesses.

It is a figure which organisations such as the World Bank do use, and which tends to rank Ireland lower.

However, economic activity is now incredibly inter-linked. GNI is a better attempt to show how the ‘real’ economy is performing. But at least for the likes of Ireland, it is still often impacted by the activities of multinationals.

OK, while it might not be perfect, it still sounds better than GDP. So why doesn’t everyone use GNI?

It is because GDP is still the recognised international standard. And it is incredibly hard to change the agreed-upon standard which has been set in stone for decades.

GDP exists for every country.

It is compiled in the same way everywhere, and there are always annual figures available. This makes it much easier to compare GDP between different nations. GNI is harder to track and compare between different nations.

Also, GDP does ‘generally’ work. Rising GDP normally means a workforce is doing well, living standards are going up, and so on.

Obviously, this doesn’t work in Ireland’s case. But for many countries, it does.

There has been a pushback in recent years on GDP being held up as the economic standard. Critics say that, even in countries where it is more accurate, GDP does not reflect important economic factors such as inequality.

Despite that, it isn’t easy to replace with a standard which is straightforward to calculate and track, and which everyone can largely agree to.

GDP clearly does not work well in Ireland’s case. And it can be frustrating to read the headlines about how rich the country supposedly is, when they are based on a number which does not reflect the real economy. But there is a reason that GDP is still the standard, and it is unlikely to change anytime soon.