ANALYSIS:Figures are good but caution is required as the euro zone crisis will have negative effect.

THERE WAS a lot of good news in yesterday’s economic data – perhaps more good news than at any time since the depression started.

The first chart illustrates this well. Not only did exports hit new all-time peaks – yet again – in the second quarter of the year, but the domestic economy grew, too. The latter development is little short of a miracle given the headwinds it faced at the time.

But before anyone gets too excited, it does not mean that the corner has been definitively turned. There are multiple caveats attached to yesterday’s data: one-off factors may have flattered the numbers. There is plenty of potential for downward revisions of these ever-volatile figures and, of course, the crisis in the euro area, which reached new heights at the beginning of July, can only have negatively affected performance in the third quarter.

Yesterday’s turmoil in financial markets internationally, and fresh signs of a slide in the European economy, overwhelmed the new-but-dated evidence of this economy’s better performance up to the end of June. But all that said, there were too many positives in the second quarter to write off yesterday’s figures as a fluke or an irrelevance.

All the main sectors of the economy grew, with the exception of the downsizing public sector.

GDP, GNP and domestic demand all expanded on the quarter – the first time that has happened since the economy went off a cliff. Another recessionary first was that GDP registered a second consecutive quarter of growth – it is half a decade since that last happened.

Services export growth continued to surge in the second quarter despite the global slowdown. The balance of payments continued to move towards a solid surplus.

And to crown the good news from the three months to June, statisticians revised upwards their first quarter growth calculations.

The unexpectedly positive results sent most economic forecasters scrambling to revise their figures for the economy for the whole of 2011.

Even if the economy flatlines in the second half of the year, it is set to achieve a 2 per cent expansion on 2010. That is far ahead of all but the wildest expectations. The IMF, for instance, said this week that the economy would grow by just 0.4 per cent. It would take a severe slump in the second half of the year and/or massive data revisions for the IMF’s forecast to be correct.

The Government’s own official forecast – of 0.8 per cent – looked optimistic before yesterday’s figures. Where Department of Finance officials had been preparing to lower their forecast, they now have the happy task of revising it up. It has been a long time since officialdom was too conservative in its estimates of anything.

This, in turn, makes the budget deficit target easier to hit, and even exceed.

Under the terms of the EU-IMF bailout, the deficit should not be greater than 8.6 per cent of GDP. The larger the GDP figure, the lower any given deficit when expressed as a percentage of it. That matters a lot as the deficit/GDP ratio is one of the figures investors watch most closely when considering how risky a country is to lend to.

Internationally, the news was grim yesterday. About the only solace in all this is that the Eurorpean Central Bank is increasingly likely to cut interest rates next month in an effort to cushion the weakening euro area economy.

Not only does the economic situation warrant this, but the bank’s president, Jean-Claude Trichet, may calculate that there are good “political” reasons to cut. Next month is his last in charge of the ECB. In Novemeber, the Italian, Mario Draghi, will take over.

Central bankers always want to appear tough. Starting a term with a rate cut could signal weakness, or – horror or horrors for a central banker – a willingness to play fast and loose with inflation. Trichet would do for his successor – and everyone else – a big favour by doing the rate cutting before he departs to enjoy his pension.