Fears recession is not yet over
Irish firms continue to suffer a serious downturn in business despite an official report declaring the recession over, it was revealed today.
After two years of collapse, there are fears the country could be hit by a two-speed economy with foreign multinationals booming and homegrown firms stuck on a long losing streak.
International companies have enjoyed a €2bn jump in profits over the past year but experts warned this would do nothing to bring recovery to Irish homes and businesses.
Finance Minister Brian Lenihan, who predicted Ireland would move out of recession in the summer, said the report was concrete evidence Government steps to tackle public finances and the banking system were paying off.
“Today’s figures also show that exports are performing strongly, while consumer spending has stabilised,” he added.
“This, coupled with the figures for consumer confidence since April, bode well for the remainder of the year.”
While the value of all goods and services, measured by GDP, grew at 2.7% in the first three months of the year, Irish companies saw their business fall for two years straight – profits were down €6bn in 2009.
Mr Lenihan claimed the figures showed Ireland was now enjoying the fastest economic growth in the OECD group of developed countries – but that is on the back of the worst recession.
Austin Hughes, KBC Bank Ireland chief economist, claimed the economy may in fact just be bottoming out.
“As exports were the only sector reporting a quarterly increase, it seems reasonable to suggest that for most Irish businesses and households, the first quarter of the year was not one of recovery,” he said.
The Central Statistics Office (CSO) said consumer spending was down 0.8% year on year – because of the harsh winter weather and slow car sales – while capital investment was 30% cent lower.
2009 saw the biggest collapse in the economy on record while January to March this year saw the first growth since the end of 2007.
Simon Barry, chief economist with Ulster Bank, said: “The freefall in activity is over and Irish output and confidence is benefiting from the turnaround in the global economic environment over the past year.
“That turnaround isn’t without risks of course, and it will be critically important from an Irish perspective that a global double-dip is avoided if the domestic economy is to continue along the recovery path.”
