Irish economic growth halved over the first nine months of the year, the latest figures show. Barry O'Halloranreports.
The Central Statistics Office (CSO) yesterday released national accounts showing that gross domestic product (GDP), the total value of all goods and services produced in the State, reached €44.4 billion in the third quarter of the year.
This was 4.1 per cent ahead of the same period in 2006, and just half the 8.4 per cent rate of economic growth the CSO recorded during the first quarter of this year.
The office published the Quarterly National Accounts just 24 hours after another agency, the Economic and Social Research Institute (ESRI), predicted that growth would slow to 2.3 per cent in 2008, its slowest rate for 16 years.
However, while economists acknowledged yesterday that the statistics showed a slowdown in growth, they argued that the Republic is not facing a slump.
The predicted that overall growth for this year would fall between 4.75 per cent and 6 per cent, but said it would slow further in 2008.
They also pointed out that consumer spending grew strongly at 6.4 per cent. Another key element, net exports, was buoyant, with the figures showing it was €548 million ahead of the same quarter in 2006.
Bloxham Stockbrokers economist Alan McQuaid predicted that falling growth would continue into next year. "At this stage the omens don't look too good for 2008, with housing activity likely to slow sharply."
However, Mr McQuaid added that export growth could be surprisingly strong next year. "On this basis we continue to believe that GDP growth of 3 per cent is achievable, a figure which would still be higher than most of euro land."
Pat McArdle, chief economist with Ulster Bank Capital Markets, said the slowdown began around mid-year. One of the factors he singled out was a 7.5 per cent slowdown in investment growth, which was mainly a result of the housing slowdown.
Austin Hughes of IIB Bank argued that yesterday's figures indicated a step down from an ultimately unsustainable rate of economic growth to a healthier one.
Dr Dan McLaughlin, chief economist with Bank of Ireland global markets, agreed that the housing slowdown has been putting the brakes on economic growth this year. Despite the likelihood of a continued decline in this industry, exports and consumption would still see the economy grow by 4 per cent next year.
