Ireland’s export-driven economy returns to GDP growth, but unemployment rises to 13.4 percent

Irish economy resumes growth, unemployment rises

DUBLIN — Export-driven Ireland has resumed growth following eight straight quarters of sharp declines, but the domestic side of the economy is still declining and unemployment keeps rising, the Central Statistics Office reported Wednesday.

The government agency said Ireland’s gross domestic product grew 2.7 percent in the first quarter of 2010. It was the first such rise in Irish GDP since the last quarter of 2007, when Ireland’s economy began to buckle amid a bursting bubble in construction and property speculation.

However gross national product — a different measure which excludes the largely expatriated profits of foreign multinationals — continued to slide a further 0.5 percent in the January-March quarter, suggesting that Ireland’s domestic economy is still struggling to climb out of its worst recession since the 1930s.

The agency said the number of people claiming unemployment benefits reached a new record high of 452,882, a 3.4 percent rise from May. That figure includes 79,239 people in part-time or casual jobs still eligible for welfare.

Overall Ireland’s unemployment rose to 13.4 percent from May’s rate of 13.2 percent, a 16-year high.

Opposition lawmakers berated Prime Minister Brian Cowen in parliament for presiding over the biggest loss of jobs in Irish history.

“The government has fallen into the trap of believing that a jobless recovery is good news for the economy. But a small increase in national output is no good to anyone if it doesn’t make any inroads into Ireland’s massive unemployment levels,” said lawmaker Leo Varadkar of the opposition Fine Gael party.

The government’s minister for social protection, Eamon O Cuiv, argued that most of the June jump represented people on government-funded education and training programs who are permitted to claim jobless benefits in the June-August quarter only. He said the rising unemployment figure “will be reversed in the autumn.”

Economists broadly welcomed the news of GDP’s return to the black as a long-awaited sign that Ireland’s recession is ending.

They credited the GDP rebound to Ireland’s dependence on the growing U.S. economy — 600 American companies have operations in Ireland — and the recent slide in the euro. The weaker European currency makes Ireland’s exports of software, pharmaceuticals, food and services cheaper for its two biggest trading partners in Britain and the United States.

Wednesday’s report said profits shipped out of Ireland by foreign multinationals rose nearly 20 percent in the first quarter of 2010 versus the same period a year ago to top €10 billion. Such money is included in Irish GDP figures but doesn’t help the Irish economy, which is why many economists consider GNP a fairer measure of Irish economic health.

The agency also published revised 2009 figures Wednesday. It said Ireland’s GDP fell 7.6 percent last year, more than the previous figure of 7.1 percent, while GNP fell 10.7 percent, not 11.3 percent as previously estimated. Either way, these figures show Ireland last year suffered its worst economic fall in history.

Economists raised their forecasts for Irish growth in 2010.

Alan McQuaid, chief economist of Bloxham Stockbrokers in Dublin, said he now expected GDP to grow 1.0 percent to 1.5 percent this year versus 2009, driven by robust exports, while GNP would slide a further 1.0-1.5 percent.

“Overall we think the numbers are very encouraging,” said McQuaid, who expects both GDP and GNP to rise in the current April-June period versus the previous quarter.

Online:

Ireland’s Central Statistics Office, www.cso.ie