Economic woes continue in Ireland

There are fears that Ireland could
be heading for a double-dip recession after the troubled economy contracted in
the second quarter of the year.

Businesses had shown signs of
picking up in the first part of 2010 so the latest figures were an unexpected
blow.

If an economy shrinks for two
successive quarters, it means it is in recession.

The new figures showed Ireland’s
shrank by 1.2 per cent confounding analysts’ predictions of a rise of 0.5 per
cent.

The value of goods and services,
including foreign-owned companies, declined 1.2 per cent between April and
June.

This Gross Domestic Product (GDP)
figure compared with growth of 2.2 per cent in the first quarter when Ireland
exited a sharp recession.

Home-grown businesses were also hit
this time but not to the same extent, with their value down by 0.3 per cent.

The Republic’s Central Statistics
Office (CSO) said the economy suffered a fall in consumer spending – down 1.7
per cent compared with the same period last year.

The national accounts showed
exports continued to show strong growth, up 884m euros (£750m) on the same
three months in 2009.

The CSO also reported the overall
value of industry output grew 1.7 per cent compared with the second quarter of
last year.

But construction, one of the
biggest victims of the country’s downturn, was down 28 per cent.

Finance Minister Brian Lenihan said
the figures showed home-grown business had stabilised and weaknesses in the
economy came from a surge in imports over the three months.

“This had a depressing impact
on the overall GDP (gross domestic product) figure,” he said.

Analyst Giles Watts at trading firm
City Index said: “Despite the protestations from senior Irish politicians,
there is concern for the Irish obligations and moreover the health of the
European economic recovery generally.”

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