Let's go shopping to boost recovery: Noonan
If you have it, spend it, minister says as the economy starts to grow
FINANCE Minister Michael Noonan last night encouraged consumers to shop their way out of the economic gloom, as new figures showed the strongest growth in three years.
In an appeal aimed at those Irish people who are holding a total of €134bn in savings accounts, Mr Noonan said it was time to return to normal shopping habits.
"What we really need is for people to go into the shops and start buying again,'' said Mr Noonan in a message to those who had the cash to spare.
He pointed to consumer and tourist spending as a means to help escape the current crisis.
The economy is now showing the strongest growth since the end of 2007, as tentative signs of a recovery emerge on the back of exports.
New CSO figures show that the Irish economy actually expanded in 2010, contrary to earlier expectations, with growth up 1.3pc in the first quarter of this year.
And almost half of people said they felt more optimistic about the prospect of economic recovery under the new Government, in a new Irish Independent/Millward Brown Lansdowne poll.
The findings of the opinion poll show 47pc are more optimistic about recovery, 28pc feel the same and 23pc are less optimistic.
However, despite more optimistic economic data, consumers remain nervous, and their spending actually dropped in the first quarter of the year.
Mr Noonan insisted that recovery could come on the back of changed consumer sentiment.
"If that starts, with tourists visiting our shores stimulating the retail side, and is followed by our own ordinary citizens going about their shopping and beginning to spend again, then we begin to lift out of the crisis," he said.
The Government has tried various measures to lure consumers back into their usual spending patterns, including slashing VAT rates as part of the jobs stimulus plan.
Mr Noonan said it was too early to say whether these measures had worked.
He, like other ministers, is hoping that the international markets will start to see Ireland in a different light from Greece. This week the Government put out a document highlighting that Ireland was a more open economy than Greece, with a younger population.
Ireland and Greece are both receiving funds from the IMF/ EU, but Mr Noonan claimed there was no danger that Ireland would be caught up in the Greek crisis as long as the country stuck to its budget plan.
The Government is hoping that confidence can be slowly restored, but it is facing serious obstacles.
The CSO national income figures show that in 2010 consumers cut back on a whole range of spending areas including cigarettes, food and drink.
Transport and oil or fuel were the few areas where spending was flat or rising.
"The weakness in spending was greater than expected and highlights the ongoing fragility in domestic demand," said Simon Barry of Ulster Bank.
He pointed out that after yesterday's changes, it turned out that the collapse of the economy was not quite as severe as earlier figures indicated.
The CSO yesterday issued revised its figures for 2010, changing its earlier finding that Ireland's economy shrunk last year. Instead the agency said the national income of Ireland actually rose 0.3pc year-on-year.
However, GNP for the first quarter, which strips out profits from multinationals, was down 4.3pc. The CSO said that while a large drop, it was a blip.
While the growth rates were quite small, the trend was moving "in the right direction", said Aidan Punch of the CSO.
It was thought that the Irish economy had crashed by 14.6pc since 2008, but the figure from the CSO is now 12.6pc.
Economists welcomed the figures, while accepting it would be a long haul back to the kind of growth needed to dent the unemployment figures.