Ireland’s economic growth rate surged to a post-crisis high of 4.8% last year, the fastest rate in the EU, as data confirmed a stunning recovery from the devastating 2008 property crash.
After two years of near stagnation, higher exports and consumer spending lifted 2014 gross domestic product growth to almost four times the average 1.3% rate posted across the EU after most countries had published data.
It is the country’s highest growth rate since 2007, the final year of the Celtic Tiger boom, when the economy grew by 4.9%.
The economic recovery is good news for the Government, ahead of the general election early next year, though a recent surge in anti-austerity protests indicated that the recovery was slow to filter through to ordinary workers.
It also reinforces claims by the EU and IMF that austerity policies implemented by the Government were ultimately good for the country.
After exiting an international bailout at the end of 2013, the economy surged in the first six months of 2014. Growth in the second half was slower, with the economy expanding just 0.2% in the fourth quarter.
But there were positive signs, with personal consumption growing 1.3% quarter-on-quarter in the final three months of the year, while exports were up 1.2%.
“It shows the recovery is broadening and strengthening and there seems to be decent momentum coming into 2015 so you’d expect it to be sustained,” said Austin Hughes, chief economist at KBC Bank Ireland.
“The pick up in domestic demand is the most encouraging aspect.”
The 2015 budget is based on economic growth cutting the budget deficit below the EU limit of 3% of GDP by the end of the year.
Finance Minister Michael Noonan said the data confirmed Ireland was the fastest growing economy in the EU this year and that the data was consistent with projections for growth of 3.9% this year.
A series of anti-austerity protests late last year raised fears ordinary workers were being bypassed by the recovery and might punish the Government at the elections next year.
“The Government is happy in its ivory tower, but the man on the street is living in a different world,” said Billy Kelly, 57, a small business owner who said his working children were struggling to cover the rent and rising food and transport costs. “No one I know is saying ‘happy days’.”
“All in all, the national accounts release is broadly in line with our views on how the economy performed last year,” said Investec chief economist, Philip O’Sullivan.
“Looking ahead, survey data such as the three PMIs point to continued broad-based growth in 2015. We are currently forecasting GDP to rise 3.7% and GNP to improve by 3.8% this year and while we expect to make some revisions to our estimates on the back of these data we don’t envisage any significant change to our headline estimates.”
The NTMA also raised €1bn yesterday through the sale of a 30-year bond at a yield of 1.307%. The agency has raised €9.5bn so far this year out of a target of €12bn to €15bn.
Mr Noonan, speaking at a conference in Dublin, said he has instructed the NTMA to make an early repayment of IMF loans that formed part of the €67.5bn EU/IMF bailout in November 2010.
“I have instructed the NTMA to proceed with the early repayment of the final €5.5bn of IMF loans that we secured agreement to repay,” he said.
“This early repayment of the majority of IMF loans will deliver savings of over €1.5bn over the lifetime of the loans.”
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