The economy slowed to a virtual halt in the first quarter of the year, according to the latest figures from the Central Statistics Office (CSO). The numbers point to stagnation across almost all parts of the economy, with exports and capital investment particularly anaemic.
Consumer spending and industrial production, despite registering mild growth, have also lost most of their momentum.
The CSO said the economy had grown by just 0.5 per cent on the gross domestic product (GDP) measure, and 0.8 per cent in gross national product (GNP) terms. The GDP growth, which includes the profits of foreign multinationals, was the slowest in more than four years. This suggests once-buoyant sectors such as pharmaceuticals and information technology have failed to insulate themselves against the slowdown.
The CSO said that if the numbers had been adjusted for seasonal factors, GDP would probably have lurched into negative territory. The Irish Software Association (ISA) highlighted the pressures on such firms with a warning that the Republic could lose skilled software jobs to the US because of salary deflation and euro strength.
CSO director Mr Bill Keating said yesterday's first-quarter growth numbers painted "the picture of a slowdown".
Labour accused the Government of the "cynical political manipulation" of the economy, while Fine Gael said the coalition had "got everything back to front" by fuelling the economy during the boom and raising taxes at a time of slowdown.
The Green Party said the Government must place greater emphasis on protecting and developing indigenous industry.
The figures confirm trends that have been apparent in CSO releases for some months, pointing to a weak increase in industrial output over the first quarter and a 12.8 per cent decline in exports
Mr Keating declined to comment in detail on suggestions that export and import trends could have been unduly skewed by carousel VAT fraud in the UK, saying only that the CSO had no information on the "motivation" behind any particular set of imports or exports.
Personal consumption, which grew by 1.8 per cent year-on-year was one of the few positive elements contained within the first-quarter release, but spending remained sluggish when compared to recent years.
Capital investment fell off by 12.4 per cent, but the CSO attributed the decline largely to base effects linked to a large purchase of aircraft by Ryanair in the corresponding period in 2002. Housing construction rose by 14 per cent while other building activity shrank by 12 per cent.
Mr Austin Hughes, chief economist at IIB Bank, said that, while the figures were based on a "stuttering economy", they were "mildly encouraging". He is expecting GNP growth to average at 2 per cent this year.
Economists at Davy Stockbrokers are less optimistic and have maintained a GNP forecast of 1 per cent. Dr Dan McLaughlin, chief economist at Bank of Ireland, predicted GNP growth of 3.5 per cent and GDP expansion 2.5 per cent.
