Hopes for recovery in the economy in the second half of this year received a serious setback yesterday when new figures from the Central Statistics Office showed that Ireland has fallen back into recession.
In the first three months of this year, the fall in consumer spending on the previous quarter was the largest on record, while the decline in exports was the second biggest since figures were first compiled in 1997.
Gross domestic product, the widest measure of economic activity, contracted by 0.6 per cent between January and March, compared to the previous three-month period on a seasonally adjusted basis. The decline was the third consecutive quarter of contraction in GDP, according to revised figures for the second half of last year also published yesterday.
Economists define recession as two back-to-back quarterly falls in this measure of output.
Minister for Finance Michael Noonan said last night that the latest figures showed the scale of the challenge Ireland still faced as the country sought to grow its way to a full and sustainable economic recovery. “However, these figures should not be viewed in isolation. Significant progress has been made in putting our public finances on a sustainable path and the indication from tax receipts for the first six months of the year is that we will meet our budget targets, which were based on growth rates of 1.3 per cent,” he said.
Fianna Fáil’s finance spokesman Michael McGrath criticised the Government for its inaction. He said that almost two years on from the announcement of a strategic investment plan, the necessary legislation to allow the funds to be put into the economy has yet to be enacted.
The economy’s weakness in the early months of this year was driven in part by declines in exports. In just three months, the volume of goods and services exports fell by 3.2 per cent. This reflects weak demand in export markets and structural changes in the pharmaceutical sector.