Irish economy picks up in Q1
Source: Agencies |
June 24, 2011, Friday
|
Print Edition
Print Edition
IRELAND'S economy rebounded sharply in the first quarter as strong exports and profits from Irish-based multinationals compensated for flagging consumer demand in one of the countries worst hit in the eurozone's debt crisis.
Ireland needs solid economic growth over the medium term if it is to persuade sceptical investors it can shoulder a debt burden which has quadrupled on the back of a banking collapse and avoid following Greece into a second EU-IMF bailout.
Gross domestic product jumped 1.3 percent in the first quarter on a seasonally adjusted basis, far exceeding expectations for a 0.8 percent increase, preliminary data showed yesterday.
But economists cautioned the jump from a revised drop of 1.4 percent the previous quarter was due to external demand, not a recovery at home. Consumer demand dropped 1.9 percent in the quarter, the worst in two years.
"Overall the numbers continue to indicate that we're bouncing along the bottom. There's no real signs of growth in the economy overall because of the drag of domestic demand," said Dermot O'Leary, economist with Goodbody Stockbrokers.
"We've an economy which is going to be flat this year, GDP could be slightly up and GNP slightly down. I think the government is too optimistic."
Ireland's government, which is targeting average economic growth of around 2.3 percent between 2011 and 2014, wants to make a tentative return to debt markets late next year but that will be a tall order.
The premium investors demand to hold Irish bonds rather than benchmark German bunds have nearly tripled over the past 12 months despite Dublin agreeing to an 85 billion euro EU-IMF bailout in November meant to draw a line under its crisis. On a gross national product basis, which strips out profits from multinationals based in Ireland, the economy shrank 4.3 percent. Most economists view GNP as a more accurate picture of the Irish economy.
"It's slightly confusing because you have GDP and GNP going in separate directions but basically... you have the export sector doing well and you have domestic demand continuing to weaken," said O'Leary.
Ireland needs solid economic growth over the medium term if it is to persuade sceptical investors it can shoulder a debt burden which has quadrupled on the back of a banking collapse and avoid following Greece into a second EU-IMF bailout.
Gross domestic product jumped 1.3 percent in the first quarter on a seasonally adjusted basis, far exceeding expectations for a 0.8 percent increase, preliminary data showed yesterday.
But economists cautioned the jump from a revised drop of 1.4 percent the previous quarter was due to external demand, not a recovery at home. Consumer demand dropped 1.9 percent in the quarter, the worst in two years.
"Overall the numbers continue to indicate that we're bouncing along the bottom. There's no real signs of growth in the economy overall because of the drag of domestic demand," said Dermot O'Leary, economist with Goodbody Stockbrokers.
"We've an economy which is going to be flat this year, GDP could be slightly up and GNP slightly down. I think the government is too optimistic."
Ireland's government, which is targeting average economic growth of around 2.3 percent between 2011 and 2014, wants to make a tentative return to debt markets late next year but that will be a tall order.
The premium investors demand to hold Irish bonds rather than benchmark German bunds have nearly tripled over the past 12 months despite Dublin agreeing to an 85 billion euro EU-IMF bailout in November meant to draw a line under its crisis. On a gross national product basis, which strips out profits from multinationals based in Ireland, the economy shrank 4.3 percent. Most economists view GNP as a more accurate picture of the Irish economy.
"It's slightly confusing because you have GDP and GNP going in separate directions but basically... you have the export sector doing well and you have domestic demand continuing to weaken," said O'Leary.
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