GDP contracted by 0.6% in first three months of the year

Thursday 27 June 2013 15.24
Falling exports contribute to drop in GDP of 0.6% in first three months of 2013
Falling exports contribute to drop in GDP of 0.6% in first three months of 2013

The economy slipped into recession in 2012 as the Central Statistics Office revised its growth figures lower for the fourth quarter of the year.

The Central Statistics Office said that GDP shrank by 0.6% in the first quarter of 2013 from the previous three month period.

The CSO also revised figures for the fourth quarter of last year to show a contraction of 0.2%. This follows shrinkage of 1% in the third quarter of 2012.

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

Overall the economy grew by just 0.2% last year, rather than the 0.9% initially thought, as 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 on a provisional basis.

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 - its sharpest drop in four years. Net exports also declined by over €1 billion over the three month period.

Disappointment at today's economic figures

The Irish Exporters' Association has expressed disappointment at the latest economic figures, saying that conditions are set to remain very difficult this year "right through to the winter".

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.

Commenting on today's figures, Goodbody chief economist Dermot O'Leary said that the data lived up to their reputation for being volatile, with revisions stretching back to 2007.

The economist said they once again highlight the difficulty in assessing trends in the Irish economy on the basis of GDP or GNP due to the volatility of multi-national profit flows and the large revisions that occur on an annual basis.

''The bottom here is that while headline domestic demand remains weak, there are still underlying signs of stabilisation, with domestic demand excluding planes falling by just 0.6% year on year,'' Mr O'Leary said.

Investec economist Philip O'Sullivan said that while a poor first quarter economic performance had been anticipated, he was disappointed by the ''softer signs'' around domestic demand.

But he said that over the coming quarters he expects to see an improvement in headline Irish growth. This will come on the back of '' brighter prospects for certain of the country's larger trading partners and better labour market trends should see the domestic economy providing less of a drag on growth as the year goes on''.