Ireland: Economy continues to grow in the second quarter
September 22, 2011
In the second quarter, GDP expanded a seasonally adjusted 1.6% over the previous quarter, slower than the 1.9% increase observed in the first quarter (previously reported: +1.3% quarter-on-quarter) but well above market expectations that had seen GDP growing a mere 0.3%. On an annual basis, the economy added 2.3% in the second quarter, accelerating from the 0.3% increase registered in Q1, the fastest year-on-year expansion since Q4 2007. For the first time since the same quarter last year, domestic demand contributed positively to economic growth. Most notably, private consumption rebounded sharply from a 1.9% contraction in the first quarter to a 0.3% rise in the second. Furthermore, fixed investment accelerated from a 2.4% increase in the first quarter to a 6.4% expansion in the second. Government consumption, however, declined 0.8% (Q1: -2.0% qoq) as a result of ongoing fiscal tightening in the country. Meanwhile, the external sector continued to be the key driver of the economic recovery, although its contribution to growth was down on the previous quarter. Exports decelerated, expanding 1.0% in the second quarter (Q1: +3.1% qoq), while imports fell 0.6% (Q1: +0.1% qoq). With exports outpacing imports, the external sector's net contribution to GDP growth remained positive, but decreased from plus 3.0 percentage points in the first quarter to plus 1.5 percentage points in the second. The Central Bank expects GDP to grow 0.8% in 2011 and 2.1% in 2012.