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GDP figures shock amid recovery hopes

Thursday, March 13 11:40:34

Ireland's economy contracted by a shock 2.3pc in the fourth quarter from the previous three months as imports surged and consumer spending fell, denting a recovery that had been gaining traction since the completion of an EU/IMF bailout last year.

Gross domestic product (GDP) contracted by 0.3 percent for 2013 as a whole, following a year of scant growth in 2012, although growth in the third quarter of the year was revised up to 2.1 percent to paint a volatile picture.

Economists polled by Reuters had expected growth of 0.4 percent in the fourth quarter from the previous quarter and full-year growth of 0.3 percent. They see the economy growing by 2.1 percent next year, similar to the government's forecast.

Personal consumption fell by 0.6 percent in the final quarter of 2013 compared to the previous three months, while exports rose 2.1 percent and imports climbed 5.8 percent.

Ireland's usually robust export sector also struggled earlier in the year due to the mixed picture in Europe and the expiry of patents among the large cluster of drugs companies located in the country.

"This is the year the patent cliff hit the Irish economy," said Conall Mac Coille, chief economist at Davy Stockbrokers.

"The narrative is the domestic economy is expanding, slowly but surely and you're seeing that in employment numbers, but overall in 2013 the pharma cliff hit exports. The Q4 numbers are so volatile that it's hard to make sense of them."

Thursday's GDP figures followed recent data that showed unemployment had fallen below the euro zone average to 11.9 percent, house prices were rising and consumer sentiment was near a seven-year high.