THE IRISH economy grew in 2011 by the commonest measure of economic activity, gross domestic product, according to figures released yesterday by the Central Statistics Office. This was the first time since 2007 that GDP grew over the course of a full year.
GDP in 2011 was 0.7 per cent higher than in 2010. This was half the average rate recorded across the euro area as a whole, where GDP growth stood at 1.4 per cent.
The Irish rate of growth was higher than the weaker southern European economies, but well below the stronger economies of northern Europe.
By the narrower measure of gross national product, which excludes the profits of multinational companies based in Ireland, the Irish economy contracted by 2.5 per cent, following a slight increase in 2010.
A still narrower measure – domestic demand, which excludes imports and exports – contracted by 3 per cent in 2011. This activity has contracted more sharply than any other and is down over 25 per cent on its peak in the final quarter of 2007. Exports of goods and services grew by 4.1 per cent in 2011, a slowdown on the rate of expansion in 2010.
The year was one of two halves in growth terms, with most measures of activity registering expansion or stability in the six months to June. In the next six months, most showed signs of weakness.
GDP contracted in both the third and final quarters, by 1.1 and 0.2 per cent respectively. Two consecutive quarters of contracting GDP is the standard definition of a an economy being in recession.
GNP contracted by 1.9 per cent in the third quarter and by 2.2 per cent in the final quarter.
The weakness in the economy in the second half of the year was evident in a number of sectors.
The largest single sector of the economy is private services. It contracted in both the third and fourth quarters. Output in the agriculture, distribution and public administration sectors was lower in the final quarter than the first.
By contrast, the second-largest sector – industry – grew during the year. By the final quarter, output was at its highest in four years.
A separate breakdown of the GDP figures – by expenditure rather than sector – shows that consumer spending registered a bounce in the final quarter. It grew by 0.5 per cent, one of the strongest rises since the recession.
This is likely to have been partly the result of consumers bringing forward spending to avoid a two percentage point increase in value added tax in January 2012.
Spending by the public sector on goods and services contracted by 3.4 per cent in the final quarter of 2011, the largest quarterly contraction. Exports of goods and services registered a decline of 1.1 per cent in the final quarter
