Growth grinds to a halt in the last quarter of 2001

Economic growth ground to a halt in the last three months of 2001 according to new figures which stated that the annual GDP growth rate halved to 5.9 per cent from 11.5 per cent in 2000. The Central Statistics Office (CSO) figures indicate that the growth rate last year was slowest since before the mid-1990s.

Despite the downturn, the figures show that consumer spending remained strong while growth in industrial output declined sharply during the year after a good start.

Exports grew by 8.4 per cent in the year, down from 17.8 per cent in 2001.

Imports grew by 7.7 per cent compared with 16.6 per cent a year earlier.

Analysts said the figures for the final quarter of 2001 suggested a negative carry-over going into this year although the economy appeared to have moved into a post-boom period.

"The data suggest a reasonably controlled slowdown under way rather than a collapse," said Mr Austin Hughes, chief economist at IIB Bank.

"GNP growth of 5 per cent in 2001 should be seen against annual average growth in excess of 8 per cent between 1994 and 2000."

Mr Alan McQuaid of Bloxham Stockbrokers said: "It is quite conceiveable that we will see a minus reading for annual growth in the first quarter of 2002 ... The limited monthly data available so far this year suggest that activity has picked up in the early months of 2002 and the October-December 2001 period was the bottom of the downturn."

Confirming the trend, separate balance of payment figures showed the current account deficit grew to €1.16 billion last year from €615 million in 2000.

These figures reflected a sharp dip in investment into the Republic, which fell to €10.92 billion from €26.18 billion a year earlier.

They also show a declining contribution from the IFSC, which fell to €1.15 billion from €2.57 billion in 2000.

Income on equity - mainly in the multinational sector - grew marginally in the full year though the figures reflected a decrease in the second half.

The first full-year national accounts indicators confirm the impact of the global downturn which prompted a wider slowdown after the foot-and-mouth crisis.

While the Organisation for Economic Co-operation and Development and most domestic forecasters believe that the recovery will begin later this year, the figures confirm that the speedy growth seen in the late 1990s came to an abrupt end towards the end of 2001.

GDP growth peaked at 11.5 per cent in 2001 after reaching 10.8 per cent in 2000. The fall to 5.9 per cent last year reflected economic growth of 12.3 per cent in the first three months of the year easing to 9 per cent in the April-June period and falling to 2.8 per cent in July-September. There was zero growth in the final three months of the year. GNP figures for the same period showed growth of 5 per cent in 2001 compared with 10.4 per cent a year earlier and 8.2 per cent in 1999.

Consumer spending was 4.8 per cent higher in 2001 than a year earlier. The figure did not include house prices, which are considered as investments in the figures. It compared with spending growth of 9.9 per cent a year earlier.

While the construction industry grew by 7 per cent year-on-year and remaining industrial output was at 8 per cent, the fourth-quarter figures showed a relative decline. Mr Hughes said: "We expect only a modest improvement and a little more caution about medium-term prospects for this economy."

The director of the CSO, Mr Bill Keating, said the 2001 figures were provisional because they were subject to revision after the incorporation of additional data.