Irish Economy Shrinks 2.1% in Q1 as Capital Investment Drops

The Irish economy contracted 2.1 percent on the quarter in the three months to March 2016, following a downwardly revised 2.3 percent expansion in the previous period and missing market consensus of 0.7 percent gain. It was the sharpest drop since the last quarter of 2013, due to a fall in capital formation while household spending and government expenditure expanded and net external demand contributed positively.

On the expenditure side, capital investment decreased for the second straight period by 16.1 percent following a 1.7 percent fall in the previous quarter. By contrast, personal consumption, the largest component of domestic demand, expanded by 2.1 percent following a 0.9 percent growth in Q4; government expenditure advanced 1.6 percent, accelerating from 1.4 percent gain in Q4; and overall net exports rose 11.2 percent, as exports dropped 5 percent (+4.2 percent in Q4) while imports shrank 9.8 percent (+3.6 percent in Q4).

On the production side, there was an overall decrease of 9.2 percent in industry, within which manufacturing recorded a decline of 11.1 percent while building and construction recorded a small increase of 0.1 percent in real terms. Agriculture recorded a quarterly decrease of 4.1 percent. Meanwhile, value added increased for all service sectors in the quarter. The distribution, transport, software and communications sector increased by 2.8 percent with the public administration and defence sector increasing by 1.9 percent. Other Services rose by 1.6 percent.

Year-on-year, the economy advanced 2.3 percent, compared to an upwardly revised 28.4 percent growth in the previous period and hitting the lowest value since the fourth quarter of 2013.

Irish Economy Shrinks 2.1% in Q1 as Capital Investment Drops

CSO | Joana Ferreira |
7/12/2016 11:32:01 AM