National economy returns to growth

The Irish economy has returned to growth, with both home-grown industry and foreign multi-nationals improving business, official figures have revealed.

It is the strongest performance by the two sides of the economy since the recession hit in late 2007.

Richard Bruton, Jobs, Enterprise and Innovation Minister, who is on a trade mission to South Carolina, said the report was the latest in a growing body of evidence of export-led economic recovery.

“A strong export performance will be crucial in driving the recovery in the wider economy,” he said.

“I am determined that Government will do everything possible to support the continued success of our exports, to get growth back in the economy and get people back to work.”

The Central Statistics Office reported a 1.6% increase in gross domestic product (GDP) – the value of all goods and services being produced in the country – between April and June.

Gross national product (GNP), which focuses purely on Irish business, ignoring the valuable multinationals, also improved, up 1.1% on the previous quarter.

Over the 12 months to the end of April, GDP was 2.3% higher.

Average economic growth forecasts for 2011 as a whole have recently centred around the 0.5% mark.

Meanwhile, Paul Sweeney, chief economist with umbrella trade union group Congress, urged the Government to move immediately to stimulate domestic demand.

Mr Sweeney warned the Government should not proceed with the planned €3.6bn of cuts and tax rises in the forthcoming budget or face no economic growth next year.

“We need a better way to tackle this crisis,” he said.

“We also need to raise more in tax from high-income earners – as is happening in the United States, France and Spain.”

Mr Sweeney said €2bn a year for the next three years should be taken out of the National Pension Reserve Fund for investment in new jobs.

He said: “It can be invested in ’high multiplier’ projects that will deliver quick returns in terms of jobs and growth. These include: the retrofitting of homes, a programme of school building and upgrades, investment in public transport, national skills upgrade, a national water system and broadband.”

The CSO’s report on the Quarterly National Accounts showed that with exports performing well, the three months from April to June saw GDP, GNP and domestic demand grow at the same time for the first time since recession hit.

It revealed that the value of exports over imports grew by almost a quarter compared with the same period for 2010.

In a breakdown of business sectors the review found agriculture, forestry and fishing and industry, excluding the building trade, were the only areas seeing annual growth, up 6.9% and 10% respectively.

Experts at Bank of Ireland said the figures showed the economy was 10% below the peak in late 2007.

The bank said economic forecasts look set to be revised in light of the report which shows growth of 1.3% over the first six months.

“One might expect an upward revision to the consensus and we will probably revise our figure too, although the near-term outlook for exports is clearly less positive than it was a few months ago, given the fragility of financial markets and the lower growth forecasts for Ireland’s main trading partners,” the bank said.

Reetta Suonpera, economist with business group Ibec, said Budget 2012 should focus on the domestic economy.

“Despite the positive start to 2011, we must acknowledge that the outlook is much more uncertain than even just a few months ago. Much will depend on EU leaders’ ability to resolve the eurozone crisis, which continues unabated,” she said.

“The immediate priority for the Government is to deliver a budget that will not harm our economic recovery. Although spending cuts and tax increases of €3.6bn will be necessary, they should be delivered in a way that will cause the least amount of damage to the domestic economy.”