Irish Economy Shrinks 2.6% In Q1
Ireland's gross domestic product contracted 2.6 percent on quarter in the three months to March 2017, missing market expectations of a 2 percent growth and following an upwardly revised 5.8 percent expansion in the previous period. It was the steepest contraction since the last quarter of 2008, as fixed investment dropped sharply and government spending rose at a slower pace. Meanwhile, household consumption continued to grow and net exports contributed positively, largely due to a slump in imports.
On the expenditure side, capital investment, which accounts for approximately 35 percent of domestic demand, shrank 38.1 percent, after rising by 11.8 percent in Q4 2016. Meanwhile, household consumption, which accounts for almost half of domestic demand, advanced 1.2 percent, the same pace as in Q4; and government expenditure increased 0.3 percent, easing from a 1.1 percent gain in the previous period. Net exports rose by 61.8 percent due to a slump in imports (-12.7 percent from 2.2 percent in Q4) while exports were little changed (0.1 from 2.9 percent in Q4).
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On the output side of the accounts, industry made the most negative contribution to growth, falling by 8.8 percent (13 percent in Q4), as manufacturing recorded an 8.7 percent decline while construction recorded an increase of 4.1 percent. Decreases were also recorded in arts and entertainment (-6.6 percent from 4.4 percent in Q4), and financial services (-6.4 percent from 0.1 percent in Q4). Meanwhile, professional and administration services recorded a 3.3 percent increase (0.6 percent in Q4) and information and communication grew 2.9 percent (4.6 percent in Q4). The real estate sector increased by 1.9 percent after showing no growth in Q4.
Compared to the same quarter of the previous year, the economy advanced 6.1 percent after growing by an upwardly revised 9.9 percent in the previous period and beating market expectations of a 5.2 percent expansion.