Ireland: Economy emerges from recession with modest growth in Q2
September 19, 2013
In the second quarter, the economy grew 0.4% over the previous quarter in seasonally-adjusted terms. The increase contrasted the 0.6% decrease observed in Q1 but undershot market expectations of a 1.0% expansion in GDP. This marks the first positive reading after three quarters of contraction, and as a result the economy has emerged from a recession. On an annual basis, however, the economy fell 1.2% in Q2, following the 1.0% decrease tallied in Q1.
Domestic demand deteriorated compared to the previous quarter, as government consumption fell 1.3% in the second quarter (Q1: +0.2 quarter-on-quarter). Private consumption, on the other hand, added 0.7%, which contrasted the 2.5% decline tallied in Q1. Fixed investment contracted 3.4% in Q2, which followed the 6.4% decline registered in Q1.
On the external side of the economy, exports rebounded from a 3.5% contraction in the first quarter to a 4.2% expansion in the second. Imports also improved, growing 0.7% (Q1: -0.6% qoq). As a result, the external sector's net contribution to GDP growth improved from minus 3.2 percentage points in the first quarter to plus 3.8 percentage points in the second.
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 panelists 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%.
Author: Carl Kelly, Economist