Caution despite end of recession
Ireland is staring down a fifth year of tough austerity budgets despite the country emerging from recession.
Finance Minister Michael Noonan warned the slight upturn, with e xports hitting an all-time high, will do little to ease another wave of harsh tax hikes and spending cuts.
Estimates from the Central Statistics Office (CSO) showed gross domestic product, which includes the multinational sector, increased in the three months to June by 0.4% compared with the first three months of the year.
This follows a downturn that hit the country at the end of 2012 and the first few months of this year.
"There's no reason to be throwing our hats in the air or anything like that," Mr Noonan said.
"It's still going to be quite a tough Budget."
The Government is drafting a plan to save 3.1 billion euro (£2.6 billion) as it battles to get its deficit in line with targets set down by its bailout masters in Europe and the International Monetary Fund.
Ministers have said the aim is to make the savings in the Budget on October 15 and exit the bailout regime by the end of the year.
The economic report revealed increases in manufacturing, building and construction, and distribution, transport, software and communications. But growth was modest.
A significant rise in exports - 1.5 billion euro (£1.26 billion) - was combined with a boost in personal consumption expenditures, up 0.7% on the first three months of the year, it said.
Elsewhere, the shattered building and construction businesses improved, reporting growth of 4.2% from March to June, prompting hopes of a revival to alleviate the impact of massive unemployment caused by the property market collapse.
But despite one set of good figures, the domestic economy is suffering as it contracted by 0.4% in the same period.
Mr Noonan said overall positive growth would give the Government a foundation to build the Budget on, as well as a strategy for exiting the bailout programme.
He would not be drawn on whether it would allow the coalition to revise down its planned 3.1 billion euro adjustment.
Mr Noonan added that the "big economic job" between now and Christmas is to exit the bailout programme.
He said this was the key factor to get back into the money markets and that the Budget should be seen as "a means to an end".
"Now we are positioned with a growing economy, exports at an all-time high, very significant job creation week after week, and that's the way we want to exit the programme, as a very strong economy," Mr Noonan said.
The Irish economy was in recession throughout 2008 and 2009 before recovering slightly and then dipping again at the end of last year and the start of this year.
Aidan Punch, CSO assistant director general, warned against reading too much into small changes in economic figures.
"All of these are very minor changes - very, very minor changes. So it's important not to read too much into it," he said.
Mr Punch said it was a "conundrum" that GDP has fallen year-on-year while employment rates seem to have increased.
"They nearly seem counter-intuitive in a sense because normally one expects to get a bit of growth and then employment follows," Mr Punch said.
"We know it's a conundrum. We're working on it and we'd probably need more data."
The CSO said other countries may have experienced a similar trend.
Elsewhere, Health Minister James Reilly said while the Budget will be difficult, he expects some relief for families who have been hit particularly hard over recent years.
"I would like to think that in the Budget there will be some little things in there to help those who found it particularly difficult, parents of young children, paying mortgages, who have had their income hit in so many different ways," Dr Reilly said.
"But we are getting this country back on its feet and this time around everybody who shared the pain will share the gain, not just the elite few as before."