Economy slips back into recession - CSO

Friday 28 June 2013 07.20
A recession is normally defined as two quarters of contraction in a row
A recession is normally defined as two quarters of contraction in a row

New figures from the Central Statistics Office show that the economy has slipped back into recession.

Preliminary estimates show that GDP contracted by 0.6% in the first three months of the year due to falling exports and weakening consumer spending.

Revised data today showed a contraction of 0.2% in the fourth quarter of 2012, while the economy also shrank by 1% in the third quarter of 2012.

A recession is normally defined as two quarters of contraction in a row.

If today's provisional figures for the first quarter are confirmed, it would be three consecutive quarters of negative growth.

Overall the economy grew by just 0.2% last year, rather than the 0.9% initially thought, and the export-led recovery stalled in the second half of 2012 due to the slowdown in much of the rest of the euro zone.

Today's quarterly national accounts also show that GNP - which excludes the earnings of multinationals - grew by 2.9% in the first quarter of the year.

Breaking down the figures, they show that personal expenditure fell by 3% on a seasonally adjusted basis between the last quarter of 2012 and the first quarter of 2013.

Net exports also declined by over €1 billion over the three-month period.

The Irish Exporters' Association (IEA) has expressed disappointment at the statistics, saying conditions will remain very difficult this year.

IEA Chief Executive John Whelan described the first three months of 2013 as "disastrous" for manufacturing and agri-food exports, which fell by 9% in that time.

The sharp fall in exports, caused by a contraction in Ireland's main export markets - particularly in Europe - are blamed as the main cause for the economic contraction for the first quarter of this year. 

Mr Whelan said that services exports however had continued to grow and were up by 3% - and now account for over half of all Irish exports.

Speaking on RTÉ's News At One, he said: "The worry at this particular juncture - (with) all our information coming from our main markets across Europe and in the UK - is that we're not going to have a rapid bounce back in the second half of this year. 

"So our manufacturing and agri-food guys are going to have an extremely tough second half of the year.

"And whereas we were hoping for a turnaround...economic conditions are very fragile and we're not seeing any real benefit in terms of export growth.

"So, unfortunately, it looks like we will have a very difficult 2013 right through to the winter," said Mr Whelan.