Ireland to fall deeper into recession

DUBLIN: Ireland’s top economic think-tank predicted yesterday that the country will plunge further into a painful recession after slashing its growth forecasts for 2008 and 2009.

The latest quarterly commentary from the Economic and Social Research Institute (ESRI) said the economy is in the midst of a contraction that is large by both historic and international comparisons.

The ESRI forecasts gross domestic product (GDP) will shrink by 2.4 percent this year and 3.9 percent in 2009. It also expects gross national product (GNP) next year to fall by 4.6 percent.

In October, the think-tank had said that the country’s first recession since 1983 would not be as deep and forecast GDP would contract by 1.3 percent this year and 0.7 percent in 2009.

Coming after an anticipated contraction of 2.6 percent in 2008, the accumulated fall in output is dramatic, the think-tank said.

GNP is regarded by the government as a more accurate barometer of the country’s economic performance as it strips out substantial profits earned by multi-national companies in Ireland which are taken out of the country.

Ireland entered recession during the first half of 2008, becoming the first eurozone nation to do so, after it declared negative economic growth in the first and second quarters of 2008.

Official data showed Thursday that Ireland’s recession extended into the third quarter of the year, as the country was hit by a slumping property market and the global credit crunch.

Irish gross domestic product (GDP) shrank by 1.2 percent in the three months to September at constant prices compared with the second quarter, according to data from the Central Statistics Office.

That followed quarterly contraction of 0.6 percent in the second quarter and 0.4 percent in the first.

On an annual basis, however, the CSO added Thursday that the Irish economy grew by a marginal 0.1 percent in the third quarter, compared with the same period last year.

That followed negative readings in the first and second quarters of 2008.

Ireland has been hammered by the international financial downturn, a domestic property market slump, decade-high unemployment and the worst retail sales figures in 25 years.

Analysts had dubbed Ireland as the Celtic Tiger economy when it began to experience a prolonged period of double-digit growth in the 1990s.

With sterling approaching parity with the euro, Irish exports and tourism are also being hit as Britain has traditionally been a major trading partner.