Thursday 13 December 2018

Leading economists unconcerned as Irish GDP decreases in first quarter of 2018

Irish GDP decreased 0.6pc in the period, the CSO said Stock Image
Irish GDP decreased 0.6pc in the period, the CSO said Stock Image

Gavin McLoughlin & Independent.ie Business Desk

The Irish economy shrunk in the first quarter of the year, according to official statistics released this morning.

Irish GDP decreased 0.6pc in the period, the CSO said.

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

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

For 2017 as a whole, GDP grew by 7.2pc, the CSO said.

Merrion Capital chief economist Alan McQuaid said the dip was probably related to the heavy snow.

He said the economy was performing strongly – with GDP 9.1pc higher than it was in the first quarter last year.

"It looks like headline GDP growth for 2018 as a whole will be a lot higher than most commentators had been predicting. We now expect overall GDP growth of 7pc-9pc, with underlying growth of 4.5pc to 5.5pc."

Chief Economist at EY Ireland Prof Neil Gibson said the fall must be viewed in the context of "the very strong growth recorded in recent quarters".

"Given the volatility in the measure it should not trigger any concern over Irish economic performance. When set alongside the labour market data, tax receipts and survey evidence, the picture is still one of a fast-growing economy," he said.

"The fall in the level of consumer spending is important to track, but this is always a feature of Quarter 1 data. Across Europe Q1 growth was a little softer and it would be unreasonable to expect Ireland to maintain its 2017 growth pace.

"It is therefore important not to view a moderating of growth in 2018 in a negative light if it remains above 3pc, which we project that it comfortably will."

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