Ireland is first country in Euro zone to enter recession
According to the Central Statistics Office, Ireland has become the first country in the Euro zone to fall into recession, after the economy contracted for a second consecutive quarter.
A country is considered to be in recession when it experiences two consecutive quarters of declining economic output.
The official figures revealed gross domestic product (GDP) had contracted by 0.5% in the three months to June 30.
It is the first time Ireland has experienced a recession since 1983 and the European commission believes that Germany and Spain might be next.
Ireland has experienced a boom since the late 1990s, with multinationals arriving to take advantage of one of the lowest corporate tax rates in the Euro zone.
Ireland’s finance department said the ailing housing market and the global credit squeeze were primarily responsible for the recession.
Earlier this month, the Economic and Social Research Institute predicted the Irish economy would shrink by 0.4% over the year after growing by 6% in 2007.
Dermot O’Leary of Goodbody Stockbrokers, said we have acceptance now that the economy is in recession in 2008.
Investment spending is going to continue to act as a drag on the economy in 2009, particularly on the housebuilding front, added Mr O’Leary.
The figures showed that in volume terms, consumer spending was 1.4% lower compared with the same period of the previous year while capital investment was also 18.8% lower in the quarter compared with the previous year.
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