Economists predict Q3 growth of 0.6pc
THE economy probably expanded by around 0.6pc in the third quarter, the Central Statistics Office is expected to say this morning, according to a poll of economists.
An increase along these lines would mark the biggest expansion in more than two years, economists said ahead of the figures. While five economists surveyed by Bloomberg News predicted an average increase in gross domestic product of 0.6pc growth, many analysts are quick to note that quarterly GDP figures can be erratic.
A 0.6pc hike would be the biggest gain since the second quarter of 2011 when GDP increased 1.4pc. The economy probably expanded 1pc from a year earlier, according to the economists.
"There is likely to be stronger momentum in the economy in the second half of 2013, which should lead to a positive carryover into 2014," Alan McQuaid, a Dublin-based analyst with Merrion Stockbrokers, said.
While there are expectations that the data may reinforce the belief that a recovery has taken hold, it may also disappoint as already happened earlier this year.
There are also questions around the usefulness of the statistics being published, with the Economic and Social Research Institute in Dublin saying the figures do not give a true picture of the health of the economy because of the ending of pharmaceutical patents.
News this week that generic Viagra will hit the market more than two years earlier than expected will be another blow to Ireland's trade figures, which underpin GDP. The pill for impotence, pictured, which is made in Cork, adds billions to Irish exports every year.
The ESRI instead points to the labour market as the most useful indicator, claiming that both the Quarterly National Household Survey data and the Live Register make clear that a recovery had begun.
"The quarterly national accounts are very unreliable," the ESRI's Professor John FitzGerald said. "The CSO makes that clear, there is huge volatility. It's really when they produce their first annual set of numbers that we will know for this year."
Goodbody economist Dermot O'Leary said they are projecting year-on-year growth of 1.3pc and said he believes quarterly accounts are the broadest indicator of economic activity available.
But he says they are made less useful because of their late release, compared with other European countries, and their heavy influence by pharma and new resident companies coming in from the UK.
"What I tend to focus on is not the GDP number, but the domestic demand number," Mr O'Leary said.
"That gives a pretty good indication of the trends on the ground in the economy. That's the number that I watch out for rather than GDP." (Additional reporting by Bloomberg)