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September 23, 2010    

Ireland’s economy contracts 1.2% in Q2

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by Kay Murchie

Ireland’s Central Statistics Office (CSO) has today revealed the economy contracted by 1.2% in the April to June period - surprising economists who had forecast an expansion.

Furthermore, the CSO revised first quarter growth figures down from 2.7% to 2.2%.

Many analysts believed the economy to be on the road to recovery but today’s figures will raise further concern for the former “Celtic Tiger” economy.

“The disappointing Irish second quarter numbers have certainly exacerbated investor nervousness … driving the euro lower; despite the protestations from senior Irish politicians, there is concern for the Irish debt obligations and moreover the health of the European economic recovery generally,” according to analyst Giles Watts at trading firm City Index.

Ireland’s economy only emerged from recession in the first quarter of 2010.

It was believed that Ireland had exited recession in the third quarter of last year but an initial estimate of growth was later revised to show a contraction within the economy.

As a result, Ireland was one of the last euro zone nations to emerge from recession.

Ireland’s economy was one of the worst performers in the western world last year and prior to the current downturn, the Irish economy had not experienced a recession since 1983.

The economy slipped into recession during the first half of 2008 – becoming the first nation of the euro zone to do so.

Ireland experienced a property boom since the late 1990s, with multinationals arriving to take advantage of one of the lowest corporate tax rates in the euro zone.

The country’s unemployment is also a concern - the jobless rate currently stands at around the 13% mark.

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