Drop in exports shrinks economy in 2013
But economists upbeat about the future and upturn in world economy
THE economy as measured by Gross Domestic Product shrank marginally by 0.3pc last year, provisional figures show, amid the continued impact of the so-called pharmaceutical patent cliff.
This compares with modest growth estimate of 0.2pc put forward by the Department of Finance.
However, the Central Statistics Office warned that provisional data is likely to be revised when more detailed annual results are published later in the year.
And Gross National Product, which does not include multinationals, grew by 3.4pc.
Experts believe that GDP data is being skewed because of the patent cliff- a fall-off in the sale of pharmaceutical sales as some drugs made here lose intellectual property protection.
And economists have said the strong employment figures are a better indicator of the recovery.
Domestic demand decreased by 0.1pc. Personal spending, which accounts for about two thirds of domestic demand, fell by 1.1pc. Net exports were down over 10pc while imports are showing an increasing trend.
In the final three months of the year, GDP fell 2.3pc.
However, economists were upbeat about the economy's ability to benefit from the upturn in the world economy.
"Even on a GDP basis, we continue to believe that Ireland is better placed than most to benefit from the upturn in the world economy and assuming no major external shocks this year, there is every chance that the Government’s official 2pc growth target will be met," said Alan McQuaid, chief economist at Merrion Stockbrokers.
"Exports and domestic demand should both be stronger. Indeed, if anything the risks to growth appear tilted to the upside at this early stage of the year.
"The improved economic outlook for Ireland and the country’s exit from its EU/IMF bailout on December 15 last have already been reflected in lower bond yields."
He pointed to this morning’s sale of 10-year debt, the first auction since September 2010, with the paper being sold at a record low 2.967pc for such a maturity and with a bid-to-cover ratio of 2.9 even with the low yield with €1bn in funding raised.
"All in all, the outlook for Ireland Inc. is a lot brighter than it has been for a number of years."