Ireland’s Economy Unexpectedly Stagnates in Fourth Quarter
Ireland’s economy unexpectedly stagnated in the fourth quarter, as government and investment spending dropped.
Gross domestic product was unchanged from the third quarter, when it contracted a revised 0.4 percent, the Central Statistics Office said in Dublin today. Economists had forecast the economy to expand 0.2 percent, according to the median of nine estimates in a Bloomberg News survey. GDP was also unchanged from a year earlier.
Ireland’s economy expanded 0.9 percent in 2012, the second consecutive year of growth since the country’s real estate bubble collapsed in 2008. Irish employment rose for the first time in four years in the fourth quarter, a sign that the economy may be stabilizing.
“The Irish economy is managing to stay afloat in very stormy waters,” said Austin Hughes, Dublin-based chief economist at KBC Bank in Ireland. “It is stagnating at a time when Europe is declining and to achieve that is quite positive.”
The yield on Ireland’s security due in March 2023 was unchanged at 4.18 percent today. Ireland’s debt agency sold 5 billion euros ($6.5 billion) this month, in its first 10- year debt issuance since its international rescue in 2010. The country is “well on its way” to exiting its bailout by the end of the year, Finance Minister Michael Noonan has said.
Consumer spending increased 1 percent, growing for the second straight quarter after declining for five of the previous six quarters. Exports rose 0.5 percent, while imports gained 0.8 percent. Investment fell 0.1 percent, while government spending dropped 0.7 percent.
Gross national product, a separate gauge of economic activity, rose 3.4 percent last year. The difference between GDP and GNP is partly due to net factor outflows.
“On the positive side, it looks as if domestic spending is possibly bottoming out,” Daniel McLaughlin, an economist at Dublin-based Bank of Ireland Plc said. “The external environment is clearly a big downside risk.”
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