Ireland economy grows 7.7 percent, leads eurozone

AP News
Posted: Sep 18, 2014 9:28 AM

DUBLIN (AP) — Ireland's economy is growing at a rapid pace last experienced at the tail-end of the Celtic Tiger boom, government statisticians reported Thursday as economists declared an end to the country's financial doldrums.

The report from the Central Statistics Office said gross domestic product grew 7.7 percent from July 2013 to June 2014, the biggest annual rate of growth since early 2007. It said quarterly GDP rose 1.5 percent versus the January-March quarter.

Finance Minister Michael Noonan said the figures suggested that Ireland would record around 4.5 percent GDP growth this year, accelerating the country's escape from debt woes that forced it to take a 2010-2013 international bailout. Earlier this year, Noonan forecast growth of just 2.1 percent.

Ireland has already resumed borrowing normally and its credit ratings are rising, as evidenced by Thursday's treasury sale of three-month debt securities at an effective interest rate of zero percent. The faster Ireland's economy grows, the more easily and cheaply it can refinance its debts on bond markets.

"These latest numbers are gangbusters," said Alan McQuaid, chief economist at Merrion Stockbrokers in Dublin, who expects Ireland to post the best growth figures this year in the 18-nation zone that uses the euro currency. He said Ireland's unusually strong exposure to Britain and the United States, its two biggest export markets, was driving improvements.

Ireland's lobbying group for employers, the Irish Business and Employers Confederation, called on Noonan to minimize further austerity measures and provide tax breaks in his 2015 budget being unveiled next month. Noonan hopes to impose further cuts, on top of a new water tax being rolled out across the country this month, to reduce Ireland's 2015 deficit below the eurozone limit of 3 percent for the first time since 2008.

The group's chief economist, Fergal O'Brien said, the unexpectedly strong growth figures demonstrated "that our great recession can be consigned to the history books."

He argued that Ireland — which has imposed eight austerity budgets since its credit-fueled property bubble burst, forcing the government to rescue its banks and face potential bankruptcy itself — "does not need any additional austerity measures to fix the public finances. It needs to keep a steady hand on expenditure, but has the capacity to cut taxes on budget day."

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Noonan said he would offer budget incentives to generate jobs and woo back university-educated 20-somethings, who have been emigrating in their tens of thousands annually since the decade-long Celtic Tiger boom collapsed in 2008. But he ruled out a generous budget because he didn't want to fuel another bubble economy.

Conall Mac Coille, chief economist at Davy Stockbrokers in Dublin, cited the breadth of growth as a particular reason for optimism.

"Every part of the economy — the export sector, construction, consumer spending — it's all picking up together and that's giving you these really strong growth rates," he said.



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