Economy expanded 0.9pc last year but stalled in second half
THE economy recorded its second consecutive year of growth in 2012, as exports pushed up growth in the first half but then stagnated towards the latter part of the year.
The country has technically slipped back into recession after two quarters of negative growth in the second half of 2012, but the contraction was so small and the figures are subject to such large revisions that this is almost meaningless.
The flat final quarter, where the economy shrank by a tiny fraction, was still better than the eurozone as a whole, which contracted by 0.6pc as the area's three biggest economies slumped.
Preliminary figures from the Central Statistics Office showed yesterday that the Irish economy grew 0.9pc in 2012, or more than the 0.7pc projected by the Central Bank after it downgraded its economic forecasts in January.
Exports showed positive growth for the third year in a row but were little changed in the final three months of the year over the third quarter.
By contrast, personal spending recorded an increase in the last three months for the second quarter in a row, signalling renewed confidence and an improvement in the domestic economy.
Analysts have predicted economic recovery will remain subdued largely because of weak export markets in the UK and eurozone.
Davy Stockbrokers said the data showed that the export market was slowing substantially while the domestic economy continues to stabilise.
"Overall, Irish GDP growth has slowed sharply," said Davy economist Conall MacCoille.
"The balance of more robust domestic demand and the extent of the slowdown in exports will determine the outlook for Irish GDP growth in 2013."
Goodbody struck a more upbeat tone, stating the data supported its forecast for a gradual economic recovery.
"Although Ireland's recovery remains fragile and dependent on exports, there are some signs that the domestic economy may have stabilised," the broker said.
Distribution, transport, software and the communications sectors were the main drivers of growth last year.
Industry, including construction, registered a small increase of 0.3pc, but agriculture, forestry and fisheries declined by 10pc.
Key figures include:
• GDP grew at an annualised rate of 0.9pc last year, but was at zero in the fourth quarter.
• Total domestic demand fell by 1.5pc.
• Exports showed positive growth for the third consecutive year, while imports remained at the same level. Overall growth in net exports of €4.4bn.
• Personal spending fell by 0.9pc over the year, but grew by 1pc in the final quarter.
• Capital formation increased by 1.2pc.
NCB Stockbrokers warned against placing too much emphasis on the numbers.
Merrion said there was clear evidence that Ireland was weathering the storm, boosted by the export sector. It forecasted 1.6pc growth this year.
Business body IBEC said the data showed the economy is rebalancing and the domestic sector is contributing to growth.
Fergal O'Brien, chief economist, said: "It was very much a year of two halves with exports performing strongly in the first half, but slowing somewhat as the eurozone crisis re-emerged after the summer.
"Consumer spending and investment contributed to growth in the second half of the year, however, and this bodes well for the domestic economy."