Debt Crisis: Irish economy nosedives again putting pressure on Government targets
IRELAND’S economy has nosedived again, falling 1.9pc towards the end of the summer, official figures have shown.
A report on the value of gross domestic product for July-September, which includes the country's huge multinational sector, showed the first drop since the end of last year.
The domestic economy also suffered, with a 2.2pc downturn in home-grown business compared with the previous three months.
The alarming Central Statistics Office (CSO) figures were published as Ireland's bailout bosses in the International Monetary Fund (IMF) warned about the knock-on effect of economy woes overseas.
After reviewing the Government's budget and austerity measures to date the agency signed off on a €3.9bn tranche of loans this week.
The IMF warned that weakening activity among Ireland's trading partners would slow Irish exports and leave real GDP growth at about 1pc next year.
The CSO said there had been a 20pc fall in investment compared with the previous quarter, figures which can be heavily influenced by the purchase of valuable aircraft.
The report also said that consumer spending, construction and government spending were all continuing to fall in the third quarter.
Looking at the changes over the year, the CSO said there has been a 15pc increase in farming, forestry and fishing while construction is down 20pc.
The Department of Finance said the figures confirmed fears that the economy would contract in the second half of the year.
"The figures are very much in line with the forecasts published in Budget 2012. They show that the economy will return to growth for 2011 and that it was prudent to revise down the growth forecasts for 2012 to 1.3pc," a spokesman said.
"The economic growth in 2011 will primarily be driven by the very strong performance in the first half of the year."
The Department warned about the significant impact the eurozone crisis is having but claimed Budget 2012 has moved to encourage growth in small and medium sized enterprises, multinationals, the agri-food sector, manufacturing, financial services and tourism.
The spokesman said the end of a car scrappage scheme also played a part in diminishing consumption.
The CSO figures show the economy shrank at the fastest rate in two years.
David Begg, head of umbrella trade union body Congress, claimed that austerity was costing growth and jobs.
"Current policies are making recovery almost impossible," he said.
"No economy can sustain the sort of ongoing damage that is being inflicted on us. The latest figures show, yet again, a big drop in domestic demand while retailers warn of more closures in the new year. We need growth and we need it quickly."
Mr Begg added: "In his budget speech, the Minister for Finance indicated that he was interested in pursuing a proposal we made in relation to facilitating private pension fund investment in key projects.
"We would urge him to act speedily on this and for the Government as a whole to act on a wider range of initiatives that can inject some growth into the economy."