2011 economic performance a mixed bag

THE latest Central Statistics Office (CSO) figures present a mixed picture of Ireland’s economic performance for the first quarter of 2011.

Finance Minister Michael Noonan welcomed the figures which show that exports helped lift the economy this year.

“This is consistent with the forecast of the Department of Finance that 2011 will be the first year of growth,” he said.

However, the figures confirm a strong showing by net exports which were up 20.6% over the 12-month period and continue to be the key driver of economic growth, as domestic demand stays weak.

Measured in Gross National Product (GDP) terms the economy grew 1.3% the CSO said, but that contrasted with a sharp dip in GNP which was down 4.3%.

GNP is regarded as the truer measure of performance as it excludes the profits of the multi-nationals based here.

The CSO said also a higher outflow of profits from the foreign-owned companies, combined with a dip in earnings by Irish firms overseas helped to create the significant gap between the two growth figures from one quarter to the next.

Economic performance in 2010 was not as bad as first thought as Gross Domestic Product (GDP) fell by just 0.4% and not the 1% previously reported.

GNP rose 0.3% last year according to revised figures against a previously estimated 2.1% decline for 2010.

The CSO also noted that increased outflows of profits from multi-nationals and a fall in profits earned abroad by Irish-based companies exacerbated the difference between GDP and GNP in the first quarter. Compared with the first quarter of 2010, GDP was up 0.1%, but GNP was down 0.9%.

Exports grew by 3.8% from the previous quarter, but personal spending and Government spending both dropped by 1.9%.

Industrial production also slipped after two quarters of growth, with building and construction output down 15.4% compared with the previous three months.

Goodbody economist Dermot O’Leary said “the key takeaway for us is that the economy has effectively been stable over recent quarters after the heavy declines of 2008 and 2009”.

NIB’s chief economist Ronnie O’Toole said the figures were better than expected, but it was still early days to reach any firm conclusions on growth for the full calendar year.

Finance Minister Michael Noonan described the figures as “encouraging” and consistent with the Department of Finance’s own estimates.