Exports performance overshadowed by domestic slump

The domestic economy suffered a dramatic slump at the start of the year, official figures have revealed.

But the overall value of the country‘s economy, boosted by multinational exports, grew slightly in the first three months of 2011.

The Central Statistics Office (CSO) said that gross national product – the measure of the Irish-owned economy – contracted by 4.3% while gross domestic product – which includes the value of foreign companies based in Ireland – grew by 1.3%.

The overall growth is the biggest quarterly boost for the economy since the end of 2007.

However, the collapse of business among Irish-owned companies is the worst three-month dip at any stage in the downturn, CSO records have shown.

The report warned that the value of exports over imports was up a fifth compared with the same time last year.

The CSO warned that consumer demand in Ireland was down 3.1% and personal consumption down 2.9%.

Figures released earlier this week showed year-on-year exports were up 9%, mainly driven by the medical and pharmaceutical sector, which was up 18%.

Employers group IBEC said there were "many positives" to take from the figures.

"The Irish economy performed a little stronger in the first quarter of the year than was generally expected," said IBEC chief economist Fergal O'Brien.

"The export performance has remained incredibly strong and it is very encouraging to see companies are increasing their investment in machinery and equipment again."

However, he added, "despite the stellar export performance and the recovery in investment, overall economic growth remains fairly flat because consumers remain too frightened to spend.

"Government must do everything it can to give households clarity on the economic situation and in particular it must clearly spell out as early as possible the likely impact of the budgetary adjustments on household finances.

"If Irish consumers start spending again a solid period of economic growth could quickly emerge."

Dermot O’Leary, chief economist at Goodbody, said the key fact was that the Irish economy has "effectively been stable over recent quarters" after the heavy declines of 2008 and 2009.

"Two other positive elements in today’s data are worth pointing out," Mr O'Leary said.

"Firstly, the CSO upwardly revised previous years estimates for GDP based on new data.

"Secondly, it was confirmed that Ireland recorded a balance of payments current account surplus in 2010 for the first time since 1999.

"This indicates that a significant private sector surplus is offsetting the large public sector deficit."

Also commenting, Chief economist with National Irish Bank Dr Ronnie O'Toole said the figures were "were somewhere better than expected" and suggest that NIB's GDP forecast of 0.8% will be met and may be exceeded.

"However, it's early days yet," Dr O'Toole stressed.

"Both figures (GDP and GNP) should be treated with caution, with huge quarter-by-quarter fluctuations relating to the timing of profit repatriation and multinational sales."

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