Ireland is officially back in recession after the government’s planned export-led recovery took a hammering.
The widest measure of the economy fell both at the end of last year and the beginning of this year with consumer spending also nosediving.
According to the Central Statistics Office, gross domestic product, which includes the multinational sector, was down 0.6 per cent in the first three months of the year and 0.2 per cent in the previous three months.
Some figures for last year were revised, meaning the country is officially in downturn for the first time since 2009.
Tánaiste Eamon Gilmore said the news on the jobs front was hugely different from the experience of four years ago.
“We are seeing an improvement. We are seeing some recovery but it is still fragile,” he told RTÉ Radio.
Official job market figures showed there was an increase of 20,500 people in work between early 2012 and early 2013.
It had been expected that official GDP figures would show growth of about 1 per cent during 2012, but standard revisions reversed the optimistic outlook.
Records showed homegrown businesses were performing well – 2.9 per cent growth in the first quarter of the year – although the actual value to the wider economy is hard to quantify because of the growing number of foreign businesses domiciled in Ireland for tax reasons.
Ireland’s Budget 2014 takes place in October and will include revised forecasts which will be independently assessed.
The poor figures now rank Ireland’s economy in a similar bracket as Spain and Portugal as far as eurozone countries are concerned, despite the government’s hopes that exports would drive recovery.
The report sparked angry responses from anti-austerity campaigners with David Begg, head of the umbrella trade union group Congress, warning there had a series of false dawns.
“These figures serve to confirm our worst fears about the policy path being followed. We have an opportunity with the coming budget to signal a significant change of course,” he said.
Jimmy Kelly, regional secretary with trade union Unite, said some of the economic figures are the worst since the financial crisis hit.
“Consumer spending is now at its lowest level since the recession began, and investment is also continuing to fall. Austerity elsewhere in Europe means our exports are also falling,” he said.
“Although the economy fell back into recession last year, government ministers ignored and denied this fact.
The CSO report showed personal consumption fell 3 per cent in the first three months of this year while the export sector suffered a decline of 3.2 per cent.
A spokesman for the Department of Finance accepted the numbers are disappointing and blamed a weak global economy for low demand for Irish exports.
He suggested the multibillion pharmaceutical sector was being affected by what it called the “patent cliff” for medicines and elsewhere one-off factors, such as a new registration system for car sales, were playing a part.
Ibec, the business lobby group, warned that the Government should rule out the possibility of any new taxes in the budget.
“Unlike four years ago, consumer fundamentals such as employment and incomes are stabilising and even improving,” senior economist Reetta Suonpera said.
“Weak confidence, exacerbated by the introduction of the property tax, is likely to have been the main culprit to the sharp decline this time around.”
Ireland brought in a property tax for the first time earlier this year for its 1.9 million homeowners as part of its bailout loan deal with the Troika.
David McNamara, economist with Davy Stockbrokers, said the weakness of the Irish economy may be short-lived.
“As expected, the recovery in consumer spending at the end of 2012 partially unwound in the first quarter, while exports and investment also fell sharply,” he said.
“However, the recovery in industrial output suggests that the fall in goods exports will be temporary.”