Road to recovery remains fragile, Gilmore says
But Tanaiste points to increasing employment in private sector as source of optimism
Tanaiste Eamon Gilmore with European parliament president Martin Schulz and Taoiseach Enda Kenny. Photograph: Yves Herman/Reuters
The dip in Ireland’s economy in the first quarter underscored the fact that the road to recovery remains very fragile, Tanaiste Eamon Gilmore said.
But Mr Gilmore cautioned against reading too much into the weak start to the year.
“I don’t think we can read an awful lot into quarterly figures. We know that quarterly economic figures in Ireland don’t always tell the full picture. I suspect this is an element of the patent cliff in the export figures which is accounting for this. If you look at the GNP figures there’s growth of 2.6 per cent,” he told reporters in Brussels.
“I think you also have to look at it in the context of what is happening with employment figures, we’ve seen increasing numbers at work in the same quarter and I think that’s very significant. We’ve seen an increase in the number of jobs created in the private sector, about 2,000 a month.”
But Fianna Fianna Fáil spokesman Michael McGrath said the figures painted a “dismal picture”.
“The Government’s policies are contributing to this crisis. During the last quarter, consumer spending went back into decline as the property tax began to hit family budgets,” he said.
“The Government urgently needs to reverse its domestic policy of piling further financial pain on ordinary families. At European level, we need to champion at the case for policies that will drag the euro zone out of the slump that it is in.”
Investec’s Philip O’Sullivan said recent economic data had already indicated a poor first quarter for the Irish economy.
“We are nonetheless disappointed by the softer signs around domestic demand,” he said. “Over the coming quarters we expect to see an improvement in headline Irish growth 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.”
Merrion Economics said it didn’t consider the bailout exit in jeopardy, with strong cash balances built up by the national Treasury Management Agency.
“Despite the poor first quarter GDP figures, we still think that Ireland is better placed than most to benefit from the upturn in the world economy when it does come, but at the moment it is likely to remain the case of an economy performing well below its potential,” Alan McQuaid said.
Business group Ibec said the figures were disappointing, but called on the Government not to introduce any new taxes on the consumer and the economy in the upcoming budget.
“Budget 2014 is an important opportunity for the Government to support the economy. The incorporation of Census 2011 results into the GDP figures means that the economy in 2011 was some €4 billion larger than we had previously thought, easing the debt and deficit burdens,” said IBEC Senior Economist Reetta Suonperä.
“There is very little Ireland can do to influence the external environment. However, it is within Government’s power to ensure that Ireland has a business environment that is conducive to productive investment, so that Irish-based firms are ready to take advantage of the upturn in global demand once it inevitably materialises.”