Economy expanding rapidly

GDP expansion of 1.9% in the three months to the end of June from the previous three months means that Ireland’s economy continues to grow at the fastest rate in Europe.

Expansion by industry, which climbed by 4.1% in the quarter, and the large economic sector comprising distribution, transport, software and communications, up 2.9% in the same period, led the surge.

Expenditure on capital formation, or investment, personal consumption and net exports all increased.

The CSO figures showed that investment on machinery and equipment building grew rapidly in the quarter, while investment in building and construction also expanded at a more modest pace.

“The headline growth is very impressive,” said Philip O’Sullivan, chief economist at Investec Ireland.

“We had expected that the economy would turn in another strong performance in the second quarter, but even still, these figures show that the economy is growing at a blistering pace.”

Merrion Stockbrokers chief economist Alan McQuiad said the economic good fortune was underpinned by the CSO figures showing GDP per capita had recovered from the slump.

Per capita income stood at a new record level of €10,944 in the second quarter.

“Based on the numbers for the first half of the year and even allowing for some slowdown in the second half because of weaker global activity, average GDP growth for 2015 as a whole is likely to be closer to 6% than 5.5% in real terms,” said Mr McQuaid.

“This is likely to be very good news for the Government ahead of next month’s budget,” he said.