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Don't cheer yet, says Lenihan, as economy grows

THE Irish economy was the fastest growing in the EU during the first quarter of the year, according to official statistics from Brussels.

EU statistics agency, Eurostat outlined that a 2.7pc growth in GDP in Ireland during the three months outstripped the performance of all the other 26 members of the union.

The second fastest growing country was Sweden, where GDP increased by 1.4pc for the quarter, with Portugal in third place at 1.1pc.

The worst performance was by Lithuania, whose economy shrank by 3.9pc, and Estonia, where the fall was 2pc.

Across the EU as a whole, growth for the quarter was 0.2pc. This was well below the 0.7pc seen in the US and the 1.2pc achieved in Japan.

However, Minister for Finance Brian Lenihan has urged caution and said that it is "too early for the Hallelujah Chorus".

"It is, of course important to keep this in perspective given the severity of the downturn this country has experienced over the last two years," he said.

The Department of Finance has now revised its Budget day forecast for GDP growth this year from -1.3pc to a positive growth of 1pc.

"That is the tangible evidence that the economic plan that the party opposite wants us to abandon, is indeed bearing fruit," Mr Lenihan said.

"The driving force of this growth is exports. Our plan is working: we must stick to it."

The minister outlined that the actions of the Government had won the confidence of the international community.

"Of course our borrowing costs are being adversely affected by the Greek crisis and its impact on market sentiment," he said.

"But our actions have allowed us to pre-fund for this year on far more favourable terms than would otherwise have been the case.

"If this recession has taught us anything it is that we must be honest with the citizens. We must tell it as it is and not as we think they would like to hear it."

Mr Lenihan's comments came after the Paris-based Organisation of Economic Co-Operation and Development said that Ireland's economy was stabilising.

However, the OECD also believes the Irish labour market will take time to heal.

It also warned that high unemployment will remain if long-term job seekers are discouraged from getting jobs.