Experts cautious over recession end
Thursday December 17 2009
Experts have urged caution about declaring the recession over despite official figures signalling the first signs of a return to growth.
The country's beleaguered economy appeared to stabilise between July and September as Gross Domestic Product shrank by 7.4% - the lowest rate this year.
But amid the glimmer of hope, politicians, business chiefs and economists warned it was too early to call a turnaround as multinationals were providing the only real boost.
Richard Bruton, Fine Gael finance spokesman, said claims that the Irish economy has turned a corner appeared to be pretty rash. "Almost every day, another new set of economic data is published which makes Minister Lenihan's Budget boast that the worst is over look dangerously complacent," Mr Bruton said.
The Central Statistics Office (CSO) quarterly national accounts detailed a slow but steady fall-off in the rate of economic decline since the start of the year, effectively meaning the end of recession, defined by two quarters in a row of falling Gross Domestic Product (GDP).
GDP measures the value of all goods and services produced in Ireland but some experts gauge economic success or failure on Gross National Product which ignores the value and profits made by foreign-owned multinationals.
The CSO report Irish firms suffering on this front with a sharp drop in consumer spending, capital investment, construction work and industrial output.
Friends First economist Jim Power said the figures suggested positive signs but warned the country had a long way to go. "Technically the fact that GDP increased between the second and third quarters would suggest that perhaps the recession is ending," Mr Power said.
"However, we need to read deeply into the numbers. The chemical and pharmaceutical sides of the economy are doing exceptionally well and that is pushing up the overall growth numbers." Mr Power said levels of consumer spending, house building and the public finances suggest the country is not yet out of recession.
Fergal O'Brien, senior economist with business lobby group Ibec, said there was light at the end of the tunnel. "In terms of the pace of contraction in the Irish economy, the worst is now clearly behind us," Mr O'Brien said.
