Economy shrinks 7.5% as home construction declines
Emergency budget: Finance Minister Brian Lenihan
Thursday March 26 2009
Ireland's economy shrank 7.5 percent in the fourth quarter from a year earlier, capping the worst full-year performance in at least a quarter century.
Investment plunged 31 percent, led by a decline in homebuilding, the Central Statistics Office said today in Dublin. Consumer spending fell 4 percent. In 2008, gross domestic product shrank 2.3 percent.
The economy may shrink as much as 6.5 percent this year as companies from Dell Inc. to Royal Bank of Scotland Group Plc cut jobs in Ireland, the government forecasts. Unemployment rose to 10.4 percent last month from 9.6 percent in January.
“All the evidence points to a further sharp deterioration in the opening quarter of 2009,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. “It is not hard to see double-digit declines in real GDP over the coming quarters.”
Exports fell 4.9 percent from a year earlier. U.S. gross domestic product contracted at a 6.3 percent annual rate from October to December, the weakest since 1982, the Commerce Department said today in Washington. About 18 percent of Ireland’s exports go to the U.S.
Finance Minister Brian Lenihan will deliver an emergency budget on April 7, as the slowing economy hurts tax revenue. The budget gap widened to €2.1 billion in the first two month of the year, the worst for the period since at least 1981, the Finance Ministry said on March 3.
Standard & Poor’s and Moody’s Investors Service cut their outlooks on Ireland’s credit rating this year, signaling they may downgrade the AAA debt rating. (Bloomberg)
- Colm Heatley
