UPDATE 2-Irish Q2 GDP flat vs Q1; defying forecast drop

thebman

DUBLIN, Sept 24 (Reuters) - The slide in Ireland's gross domestic product halted in the second quarter from the preceding three months, defying forecasts for a fall and signalling signs of stability in one of the West's worst performing economies.
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Ireland's GDP was broadly flat in the second quarter compared with economists' forecast of a 1.5 percent fall and a revised decline of 2.3 percent in January to March on the back of a tentative revival in consumer spending and export growth.

'It's starting to show signs of stability after the collapse in the fourth quarter last year and first quarter this year,' said Rossa White, chief economist with stockbrokers Davy.

The OECD has said Ireland will post the biggest economic contraction in the industrialised world this year -- a fall of 9.8 percent -- but Dublin-based economists have started to revise their forecasts on the back of improvements in retail sales and resilient exports.

The most recent Reuters poll shows economists forecasting a 7.95 percent fall in GDP this year, on a median basis, still a record drop but an improvement from the 8.45 percent forecast fall in the previous survey.
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Alan McQuaid, chief economist at Bloxham Stockbrokers, cautioned against calling a turning point for Ireland on the back of the second quarter figures.

'We're still deep in the mire and the light at the end of the tunnel is a long way off but at least it appears we're moving in the right direction.'

'Consumer spending is not as weak as it was in the first quarter but a lot will depend on confidence ... If consumers do get some good news they will spend but at the moment you're looking at domestic demand remaining weak for the rest of the year.'

Consumption of goods and services, which account for around 60 percent of national income, returned to quarter-on-quarter growth, up 0.5 percent for the first time in over a year, albeit after plummeting 5.2 percent in the period to March.


EXPORT-LED REVIVAL?

Irish people have kept a tight grip on their wallets amid rising unemployment and a hike in taxes as the government seeks to tackle the worst public finances in the euro zone.

Finance Minister Brian Lenihan has vowed to focus on spending cuts rather than further tax increases in the 2010 budget to avoid further damage to a fragile economy.

'The measures being taken by the government to maintain the public finances on a sustainable path and to resolve the banking are key ingredients towards returning the economy to positive growth,' Lenihan said in a statement on Thursday.

While exports fell in the wider euro area, UK and U.S. in Q2, Ireland saw growth of 0.2 percent to break five straight quarters of decline in volume and further Ireland's hopes of returning to export-led economic growth.

More up-to-date figures published separately on Thursday showed Irish exports in July continued to hold up against tough global conditions thanks to recession-resilient pharmaceutical and chemical products.

Analysts warned however against relying too much on an export-led revival.

'While export growth will be an important element of Ireland's recovery path, export industries alone will not provide jobs-rich growth, a reduction in the current very high precautionary levels of savings in the economy are also needed,' Ronnie O'Toole, Chief Economist, National Irish Bank said.

Gross National Product (GNP), which is seen as a more accurate measure of domestic performance because it excludes multinational profits, contracted half a percent in the second quarter from the preceding quarter. GNP had been expected to fall 1.5 percent on a quarterly basis.

http://www.forbes.com/feeds/afx/2009/09/24/afx6925914.html

Good news everyone! /Futurama reference

Anyway I'm guessing that consumer confidence stabilizing will take a bit of a hammering in the next budget when public sector gets hit and we get more tax increase (or new taxes such as a carbon tax or water tax).

Its also on RTE:
http://www.rte.ie/news/2009/0924/economy1.html

Économiste Monétaire

I had posted this in the other thread but didn't see this thread so I'm just reposting it here and deleting the other post.











Imports increased by 1%.