Official figures show that economic activity continued to fall sharply in the second quarter of the year, though the drops were not as big as in the first three months and there were signs of stabilisation, helped by a stronger export performance.
The Central Statistics Office said the economy - measured by gross domestic product - shrank at an annual rate of 7.4% in the second quarter. Gross national product - which excludes profits from multinational companies based here - dropped by 11.6%. In the first quarter GDP fell by 9.3% and GNP by 13.1%.
For the first six months of the year, GDP was down 8.4% compared with a year earlier, while GNP dropped 12.4%.
But compared with the first three months of the year, the CSO said there was no change in GDP, while GNP fell by only 0.5%.
A breakdown showed that consumer spending in the second quarter was 6.8% lower than a year earlier, while capital investment was down 24.4%. Industrial production was down 11.3%, with the construction sector showing a drop of 30.8%. But the trade surplus contributed €1.37 billion more to the economy compared with a year earlier.
In a statement, Finance Minister Brian Lenihan said the figures, though still negative, were 'a relative improvement' on the first quarter. He said they were in line with the Government's April Budget projections for a 7.75% decline in GDP this year.
The Minister said the rate of decline in our exports was very small compared with many other export-oriented economies.
'Economy heading in the right direction'
Commenting on today's figures, Bloxham economist Alan McQuaid said they continue to show the Irish economy deep in recession, with the light at the end of the tunnel still a long way off.
'However, we at least appear to be heading in the right direction, with the overall level of contraction in real GDP/GNP on an annual basis lower than in the first quarter,' he adds.
He noted that the export side of the economy is holding up remarkably well despite weak global demand conditions in the first half of the year and predicted that GDP will be down between 7.5% and 8% on average in 2009, as against a previous projection of 8.5%.
The pace of decline in the Irish economy was at its most rapid at the end of 2008 and in the first months of 2009. National Accounts, along with a number of other indicators, now show that the pace of deterioration is slowing substantially,' said IBEC's economist Reetta Suonperä.
'The global economy is pulling out of recession. Ireland will feel the benefits of the international upturn with a lag of some months, but we should see the Irish economy pulling out of recession by the middle of next year,' the economist predicted.
Separate CSO figures showed that the balance of payments current account deficit narrowed to €1.2 billion in the second quarter, from €2 billion a year earlier. This was mainly due to a sharply higher merchandise surplus of €9.3 billion, as exports held up and imports slumped. But lower income from tourism and financial services led to a €300m fall in services exports to €17 billion.
