Yesterday’s quarterly national accounts have brought some welcome positive news to Irish economic analysis. It is far still far from certain that this will be transformed in positive momentum and these preliminary figures are subject to revision. For example, back in June the CSO estimated that GNP fell by 4.3% in the first quarter of the year. In yesterday’s figure that has been scaled back to a drop of 3.0%. Anyway let’s take the figures at face value.
The most recent growth forecasts for 2011 from the DoF, IMF and ECB are that real GDP will grow by 0.8%, 0.4% and 0.6% respectively. For the first six months of 2011, real GDP has been 1.3% ahead of the level recorded for the same period in 2010 (€81.3 billion versus €80.3 billion). If this performance continued into the second half of the year the 2011 outturn would be ahead of the three forecasts above.
Of course, there is no guarantee that this growth will continue and the global outlook is turning ever more grim. In order to meet the DoF forecast, GDP for the second half of 2011 must be 0.3% up on the level recorded in 2010. This is a significant slowdown on the 1.3% seen so far this year and seems achievable.
For the IMF growth target to be met, GDP in the second half of the year can be 0.5% lower than that recorded last year. Although a slowdown in the second half of the year is probable it is unlikely that a 1.3% increase would turn to a 0.5% decrease.
For the first time in quite a while it appears that Ireland is about to overshoot official growth forecasts. This appearance could quickly evaporate with data revisions or global turmoil but let’s not be too downbeat. The news is good.
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