Business Irish

Sunday 26 January 2020

'Beast from the East' blamed as Irish economy shrank in first three months of this year

Winter weather Mar 18th 2018
Winter weather Mar 18th 2018

Gavin McLoughlin

The Irish economy shrank in the first quarter of the year, in stark contrast to the popular image of booming growth.

Amid a backdrop of Brexit and global uncertainty, Irish GDP decreased 0.6pc in the period, the Central Statistics Office (CSO) said.

Personal consumption of goods and services, described by the CSO as "an important measure of domestic economic activity", was also down, with a reduction of 0.3pc.

However, many economists blamed the heavy snow for dampening activity, along with a natural post-Christmas reduction in spending, and said the bigger picture was of a fast-growing economy.

Irish Defence Forces cadets take part in the clean-up after the 'Beast from the East' (Niall Carson/PA)
Irish Defence Forces cadets take part in the clean-up after the 'Beast from the East' (Niall Carson/PA)
The Beast from the East brought unseasonal weather to the country. Photo: Fergal Phillips
Enjoying the snow in the Phoenix Park, Dublin. Photo: Colin Keegan, Collins Dublin.

GDP is also not seen as a particularly reliable indicator of Irish growth, because it includes activity by multi- nationals which does not always reflect what is happening on the ground.

Finance Minister Paschal Donohoe said he was not "at this point" concerned about the numbers, but he was "not taking anything for granted".

"If I look at the trends that we've had in tax collection for this year, it all points to the growth targets that we had for this year being fully delivered," he said.

The minister added that income tax receipts in particular were pointing towards growth expectations being met.

Despite the positive reception of the figures, analysts have also warned about the potential for external events - such as Brexit or the trade disputes involving the US - to have a negative impact on the Irish economy.

In a report on the eurozone issued yesterday, the International Monetary Fund (IMF) said Ireland would be the country hit hardest by Brexit.

It flagged a recent study that said Ireland was the only country in the EU facing Brexit exposure levels similar to UK regions.

Mr Donohoe said yesterday that the reason the Government is planning to increase capital expenditure is to guard against the impact of Brexit.

"While we do face great uncertainty and difficulty dealing with all of this, it would clearly be vastly higher if the jobs market had not improved to the extent that it had," he added.

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