Ireland: Economy slides back into recession in the first quarter
June 27, 2013
In the first quarter, the economy declined 0.6% over the previous quarter in seasonally adjusted terms. The reading followed the 0.2% decrease observed in the last quarter of 2012 (previously reported: 0.0% quarter-on-quarter) and contrasted market expectations that had GDP expanding 0.3%. On an annual basis, the economy fell 1.0%, mirroring the result tallied in the fourth quarter.
Domestic demand deteriorated compared to the previous quarter, as private consumption fell 3.0% in the first quarter (Q4 2012: -0.3% qoq). Government consumption, on the other hand, added 0.3% over the previous quarter, which contrasted the 0.3% decline tallied in Q4. In addition, fixed investment contracted 7.4% in Q1, which followed the 1.2% decline registered in the fourth quarter.
On the external side of the economy, exports swung from a 0.1% expansion in the fourth quarter to a 3.2% decline in the first, while imports declined 1.0% (Q4: -1.1% qoq). As a result, the external sector's net contribution to GDP growth deteriorated from plus 1.0 percentage points in the fourth quarter to minus 2.5 percentage points in the first.
According to its Q2 Quarterly Bulletin, the Central Bank expects GDP to grow 1.2% in 2013 and 2.5% in 2014. FocusEconomics Consensus Forecast panellists expect the economy to grow 1.0% in 2013, which is unchanged from last month's forecast. For 2014, the panel sees economic growth accelerating to 2.0%.