Positive CSO data points to Irish return to markets

Ireland’s prospects of meeting the EU/IMF bailout targets in 2013 and making a full return to the markets received a boost with the latest growth figures from the Central Statistics Office.

GDP grew 0.2% in the three months to the end of September compared with the previous quarter, although GDP was 0.8% higher than the third quarter of 2011. However, GNP fell by 0.4% compared with the second quarter this year, but grew by 3.7% on the third quarter of last year.

“In all, given how notoriously volatile and revision-prone quarterly Irish GDP data are, in terms of drawing a conclusion from [these figures], I prefer to focus on the underlying trends as opposed to the specific numbers themselves,” said NCB Stockbroker economist Philip O’Sullivan.

“What these tell us is that the gradual recovery in the Irish economy is continuing. On an annual basis, GDP has expanded in five of the last six quarters while, on the same basis, GNP has grown in each of the last 3 quarters. We expect to see this momentum continue into the new year.”

There were positive trends in the GDP data. For the first time since the last quarter of 2010, personal consumption grew by 0.5% on a seasonally adjusted basis between the second and third quarters of 2013. Capital investment rose 8.5% in the same period, but Government expenditure fell 0.3%.

Exports grew 0.3% over the third quarter, with annual growth at 2%. “But a 2.1% rise in imports means that net trade detracted from growth,” said Davy Stockbroker economist Conall MacCoille. “This suggests that the euro area recession continues to hurt the Irish export sector. Annual export growth fell to 2% in the year to third quarter 2012, down from calendar year growth of 5% in 2011.”

Ireland’s current account surplus was 1.8% of GDP over the third quarter and 4.3% over the first nine months of the year. Ireland is the only eurozone member state in a bailout programme that has a current account surplus.

“The GDP data for the first three quarters of 2012 suggest that the Irish Government’s 0.9% growth target for the year as a whole should be met and could possibly be above 1% for the second year running, a decent performance all things considered,” said Merrion Stockbroker economist Alan McQuaid.

“In Budget 2013, the department of finance projected real GDP growth of 1.5% next year, but the risks to this forecast are to the downside in our view, given the introduction of a property tax and a weaker external environment.”


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