Figures from the Central Statistics Office show that the Irish economy technically emerged from recession in the first three months of this year, but another indicator closely watched by economists showed that the economy weakened again.
The CSO said economic output, as measured by gross domestic product, was 2.7% higher than in the previous quarter. This was the first quarterly growth in GDP since the last quarter of 2007.
But this figure was boosted by a strong increase in profits at multinational companies based here. Gross national product, which excludes multinational profits and is seen by many economists as a more accurate barometer of the Irish economy, fell again, by 0.5%, in Q1.
For the 12-month period, GDP shrank by 0.7% while GNP dropped by 4.2%.
Consumer spending in the first quarter was down 0.8% from a year earlier, though this drop was the smallest for two years. Industrial production showed growth of 7.7% compared with a year earlier, despite a 35% fall in construction output. But capital investment remained weak, dropping by 30% from a year earlier.
Trade contributed €2.6 billion more to growth than in the same period last year.
Exports the highlight, say economists
Goodbody economist Deirdre Ryan said a 'robust' performance by exports was the highlight of the figures. She pointed out that exports were up 5.5% in Q1 from a year earlier, the first annual growth since the second quarter of 2008. Ms Ryan added that the euro's weakness should boost exports further in the months ahead.
But she said consumer spending was more subdued than expected, and did not show the growth suggested by recent retail sales figures.
Davy's Rossa White said the figures indicated that Ireland was a 'two-speed' economy, with the foreign-owned part of the economy recovering while the rest of the economy lags behind. He described the consumer spending drop as 'bizarre' in the light of recent retail sales and car sales figures.
Bloxham economist Alan McQuaid described the figures as encouraging. He said that although the economy was not out of the woods yet, Ireland should be 'roaring back' up the league table of euro zone growth over the next year.
Ulster Bank's Simon Barry said the fall in GNP was a disappointment, but added that it would be wrong to dismiss the GDP measure. 'Multi-nationals are an important component of the Irish economy, even if their relative contribution to exports and output is greater than their contribution to employment,' he said.
KBC economist Austin Hughes said that while there was a technical end to recession, conditions remained tough and domestic demand remained weak..
Other figures from the Central Statistics Office today show that the balance of payments current account deficit for the first three months of 2010 was €1.622 billion. This was over €1.1 billion lower than the deficit of €2.738 billion the same time last year,
The CSO says that the first first quarter merchandise surplus of €9.382 billion was almost €1.3 billion higher due to lower imports.
Profits and interest earnings of Irish-owned businesses abroad increased to €2.483 billion while profit outflows of foreign-owned enterprises increased to €10.527 billion.
