Domestic economy expands for first time in two years

THE DOMESTIC economy grew for the first time in two years in the first three months of 2012, according to figures published accidentally yesterday on the website of the Central Statistics Office.

This comes as the troika of international organisations overseeing the Republic’s EU-IMF-ECB bailout is expected today to praise the Government’s progress in adhering to the conditions of its rescue but downplay the impact any deal on bank debt could have on the economy’s prospects.

Yesterday’s figures on the economy show that domestic demand grew by 1.5 per cent between the first three months of 2012 and the final three months of 2011.

Domestic demand includes spending by consumers, the Government and companies. It excludes exports and imports.

The figures are adjusted to smooth out seasonal effects, such as increased spending in the lead-up to Christmas.

In the first quarter of 2012, the widest measure of economic activity – gross domestic product (GDP) – which includes exports and imports, contracted by 1.1 per cent on the previous three months.

Gross national product (GNP), which is a narrower measure than GDP but wider than domestic demand, contracted by 1.3 per cent quarter-on-quarter in the January-March period.

No one measure is considered the best gauge of what is happening in an economy, but GDP is the most closely watched internationally.

The Central Statistics Office also substantially revised its figures for previous years, painting a better picture about the economy than previously.

For 2011 as a whole, GDP grew by 1.4 per cent, double previous estimates and in line with the average across the EU.

Moreover, the sharp downturn in the economy in the second half of last year now appears to have been considerably less marked than previously thought.

Developments in GDP, GNP and domestic demand were less negative than estimated by the CSO in its last quarterly publication.

The seventh quarterly review of the State’s ongoing compliance with the bailout programme will conclude today. It is understood that the troika will praise the Government but raise concerns about spending overruns in health.

Minister for Finance Michael Noonan and Minister for Public Expenditure and Reform Brendan Howlin will meet senior troika officials this morning before briefing journalists.

A spokesman for the Department of Finance said: “This is the half-way point of the programme. We’ve implemented over 120 measures and we’ve drawn down about 78.5 per cent of the funding.”