State's GNP falls almost 5 per cent

The State gross national product was down 4.9 per cent in the third quarter of the year compared to the same period last year, figures released by the Central Statistics Office (CSO) showed.

Output of the construction sector was down 18.4 per cent in the third quarter compared with that quarter last, year while capital investment was 14.7 per cent lower. The output of industry overall, including construction, fell by 2.4 per cent.

GNP for the third quarter was €37,467m and €116,102m for the year to September.

According to the CSO, consumer spending in volume terms during the third quarter was 1.3 per cent lower compared with the same period in 2007.

Output in the Distribution, Transport and Communications sector was down 4.3 per cent.

Gross domestic product was marginally higher at 0.1 per cent for the third quarter 2008, however. GDP for the third quarter was €46,117m and €139,777m for the year to September.

The profits of foreign-owned enterprises, which were €1 billion higher from July to September than a year earlier, are included in GDP but excluded from GNP.

Net exports - exports minus imports – were €2,091 million higher.

On a seasonally adjusted basis it is estimated that GNP fell by 0.9 per cent in the third quarter of 2008 compared with the previous quarter while GDP increased by 1.2 per cent in the same period.

The Irish economy is on course for its worst contraction in at least four decades as the housing market shrinks and consumer spending slumps. With the global slowdown and the pound’s drop to a record low threatening export growth, the Government is planning new measures to bolster the economy.

“Investment has led the downturn, however economic weakness is widening to consumer spending and government finances are stretched,” said Dermot O’Leary, chief economist at Goodbody Stockbrokers in Dublin. “Cumulatively, this will be the second-worst recession in the OECD in the last 40 years after Finland in the early 1990s.”

Mr O’Leary is forecasting the economy will shrink 4.2 per cent next year after a 2.7 percent contraction this year. GDP grew 6 per cent in 2007, and the economy saw a full-year contraction since 1983.

Additional reporting Bloomberg