Ireland's economic growth ahead of euro zone average

A strong fourth-quarter performance pushed economic growth in Ireland to 5.5 per cent last year, well ahead of the euro zone average and the strongest for four years.

A significant rise in profits earned overseas by Irish companies boosted GNP in the last three months of the year to 7.1 per cent in the last three months of 2004, according to the figures released yesterday by the Central Statistics Office. Irish companies earned over €1 billion from foreign operations in the period, ahead of both the €656 million recorded a year earlier and the €751 profits earned in the third quarter.

Over the year as a whole, capital investment was the key driver of GNP growth, increasing by 9.2 per cent, according to the provisional full-year data. Within that figure, house building was again particularly strong, recording growth of 11.7 per cent.

Other areas of construction were noticeably weaker, climbing just 1.7 per cent over the 12 months.

Investment slowed sharply towards the end of the year. Having grown by 10.9 and 16.6 per cent in the first two quarters of 2004, the sector was only 3 per cent ahead year-on-year in the final three months, indicating a "plateauing" in the housing sector.

Net exports of €2.3 billion were another strong contributor to growth. Exports rose 4.4 per cent during the year compared to a 2.7 per cent increase in imports.

GDP, the measure of economic growth including profits earned in Ireland by US and other foreign multinationals, grew by 4.9 per cent in the 12 months.

The GDP figure was dragged down by weak industrial output figures, especially from the multinational drugs and technology sectors in the fourth quarter.

GDP rose just 2.8 per cent in the last three months of 2004, with Government spending recording the strongest performance at 3.7 per cent growth.

The annual figures are well ahead of 2003, when GDP rose by 3.7 per cent and GNP by 2.8 per cent.

Goodbody economist Dermot O'Leary says the economy can continue to look forward to outperforming our European peers.

"Domestic growth rates are set to exceed that of our EMU counterparts for the next three years at least," he said.