CSO - Celtic Tiger 'never went away'

THE economy has grown at its fastest pace in three years new figures show, indicating the Celtic Tiger may be about to roar again.

First quarter national accounts from the Central Statistics Office (CSO) show gross domestic product (GDP) grew by 6.1% between January and March. This is the highest growth-rate since 2001.

Gross national product, which strips out the profits made by multinational companies, grew by 5.1% in the first quarter.

The CSO also revised upward its growth figures for 2004 and now says the economy grew by 3.7%, having originally put the figure at 1.4%. The surge in economy activity in the first three months was put turn to two reasons: a 12% in capital investment and a 20% increase in our exports.

The figures come following several weeks of positive jobs' announcements, with thousands of jobs across the country.

"Not only is the Tiger back, it never went away," said Dan McLoughlin, chief economist with Bank of Ireland.

"It is a simple story. The two main components of spending that tend to be the most volatile and cyclical are investment and exports. If there is a global downturn, those are the two that will fall and that happened in Ireland. The corollary is, of course, in a global upturn they will rebound," he said.

"My forecast is 6% growth this year but I might even revise it up. The potential upside is how soft consumer spending is. Year over year it is only up 2%, and I think there is evidence to suggest that it will accelerate through the year," he said.

Chief economist with Friends First Jim Power said though GDP has been strong this year, last year's GNP figure - regarded as a better measure of economy activity - still was only came in at 1.5% compared to 10.1% growth just four years ago. He added that the picture is looking better for the rest of this year.

"While the data for the first quarter will be subject to considerable revision, the news on the Irish economy is clearly very good and looks set to get better.

"The Q1 annual growth rates are exaggerated by the weak base in the early months of 2003, but the economy is well on the way to delivering GDP growth of around 5% this year and GNP growth of 4%," he said.

However, Labour's finance spokesperson Joan Burton said the rebound in the economy and its benefits - higher tax revenues - should be used to improve public services.

"Instead, we need sustained and sustainable improvements in public services. New health facilities lying idle should be opened. Cuts in social welfare schemes made only months ago should be reversed. Key areas of social need should be prioritised," she said last night.

Colin Hunt of Goodbody Stockbroker's wrote in a research report: "Ireland is well set to enjoy a return to above-trend growth for the next three years at least. Any surprises are likely to be upside."