GDP falls 1.1% in Q2, as GNP rises

GDP over the second quarter of this year fell by 1.1% compared with the same period in 2011, although GDP was flat compared with the first quarter of this year.

Fri, 21 Sep, 2012 - 01:00

John Walsh, Business Correspondent

However, second quarter GNP was up 4.3% compared with the first quarter of the year and up 2.9% compared with the second quarter of 2011.

“The stronger GNP numbers reflect a much lower net factor income — multinational profit repatriations — figure in the second quarter of 2012 compared with the second quarter of 2011, which is probably down to a weaker merchandise export performance of chemicals/pharmaceuticals this year,” said Merrion Stockbroker economist Alan McQuiad.

Industry, which includes manufacturing, energy and the building sector, expanded by 4.6% compared with the first quarter of the year and was up by 7.8% over the year.

But distribution, transport, software and communication fell by 0.3% over the same period.

Agriculture, forestry and fishing grew a marginal 0.5% compared with the second quarter of 2011.

“The GDP data for the first half of 2012 suggest the Government’s 0.7% growth target for the year as a whole could still be met, especially following the rebound in merchandise exports in July.

“But the real worry is for 2013 with the weakening global economy likely to impact negatively on projections of 2.0% plus growth,” said MrMcQuiad.

“At the moment we [Merrion Stockbrokers] are forecasting a real increase in GDP of 1.6% in 2013 — though even that looks optimistic — more than half a percentage point lower than the current projection from the Department of Finance of 2.2% growth. Lower growth will have negative implications for the budgetary dynamics next year,” he said.

Personal expenditure fell 0.4% on a seasonally adjusted basis between the first and second quarters of the year, but fell by 2.5% compared with year ago levels. Capital investment was down 29.4% and Government spending was down 3.9% over the same period. A €1bn decrease in investment in aeroplanes was the main factor behind the 29.4% fall in capital formation.