Economy contracts for third quarter

The economy may have contracted for a third consecutive quarter in the first three months of the year, as consumers held back on spending and the euro-region debt crisis curbed export growth.

GDP may have fallen by 0.4% in the first quarter from the previous three months, according to a survey of eight economists. The economy shrank 0.2% in the fourth quarter.

The figures from the CSO, which may include revisions of earlier numbers, will be released this morning.

Finance Minister Michael Noonan forecast in April the economy would expand 0.7% this year after it returned to growth on a full-year basis for the first time in four years in 2011. Yet the weakest patch in global growth since the end of the 2009 recession is threatening the export-led recovery, as unemployment rises to the highest level since 1994.

“First quarter data will most likely show the economy falling again, and that the Government’s forecast is out of reach,” said Michael Saunders, an economist at Citigroup in London, who estimates the economy may have shrunk by 0.7% in the first quarter.

“It is not because of any failings of the Irish Government but the weakness of the euro area economy and the UK economy.”

Bloomberg