Economy

Irish economy grew at three times euro zone average in Q2

Eurostat says GDP across bloc grew by 2.2% as Irish economy expands by 6.3%

The euro zone economy grew by more than initially forecast in the second quarter of the year, revised data from the EU’s statistics office showed. Photograph: Sameer Al-Doumy/AFP via Getty Images

Tue Sep 7 2021 - 12:48

The Irish economy grew at three times the euro zone average in the second quarter, according to figures published by Eurostat.

The bloc’s statistical agency said on Tuesday that the euro zone economy, grew by a better-than-originally forecast 2.2 per cent between April and June and by 14.3 per cent year on year, with consumer spending rebounding sharply after two quarters of decline during pandemic lockdowns. These compared with earlier estimates of 2 per cent and 13.6 per cent.

Central Statistics Office figures last week showed the Irish economy expanded by 6.3 per cent during the same period, three times the euro area average, also on foot of a bounce in consumer spending.

The CSO data showed spending on goods and services increased by 12.6 per cent as Level 5 restrictions eased and non-essential retail and hospitality reopened, one of the largest ever quarter-on-quarter increases in personal consumption. However, Minister for Finance Paschal Donohoe warned that caution should be exercised when interpreting annual changes as the comparison is with an exceptionally low base during the first lockdown.

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The Irish economy has for several years been the fastest growing economy in the euro zone.

The Eurostat figures show the economies of every euro zone country expanded except Malta, although for Luxembourg there was no data.

GDP volumes

However, the agency said GDP volumes across the single currency bloc were still 2.5 per cent below their pre-Covid peaks. The United States is already 0.8 per cent higher than its end 2019 level. Eurostat said household consumption in the April-June period added 1.9 percentage points to the overall quarterly figure, with government spending and investment adding 0.3 and 0.2 points respectively.

A draw-down of inventories pulled 0.2 percentage points off the overall figure, while the net impact of trade was zero.

Eurostat said also employment rose 0.7 per cent quarter-on-quarter in the second quarter and by 1.8 per cent year-on-year. The former figure was above the previously reported 0.5 per cent increase, the latter was the same as that released in August.

Separate data on Monday show German industrial output rose more than expected in July after three monthly drops in a sign that factories are partly overcoming supply bottlenecks which have been holding back a recovery in Europe’s biggest economy. The Federal Statistics Office said industrial output, including construction and energy, increased by 1 per cent on the month after a revised decline of 1 per cent in June.

Focus has now switched to the European Central Bank (ECB) meeting this week as some of its hawkish policymakers are calling for it to start paring back bond purchases with inflation surging and the growth in euro zone resilient. – Additional reporting Bloomberg and Reuters

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