Ireland's economy continues to surge as recovery gathers pace

Ireland’s government expects the economy to grow by about 6% this year, far more than originally forecast after data showed that it grew by 1.9% quarter-on-quarter from April to June.

After increasing by more than 5% in 2014, Ireland’s fast-recovering economy was already set to be the best performing in the EU for the second successive year when the government forecast in April it would grow by 4% this year.

However, the strong second quarter followed upwardly revised growth of 2.1% in the first three months, and put GDP 6.7% ahead of the second quarter a year ago, the Central Statistics Office said.

“If you get 7% in the first half of the year, if the economy didn’t grow at all in the second half, you’d still have 5.7 by year end,” the finance minister, Michael Noonan, said. “The economy is growing very strongly in the third quarter, so somewhere around 6%, slightly below, slightly above for the 2015 figure.”

Ireland’s debt to GDP ratio will fall below 100% by the end of this year, rather than 2016 as initially expected, Noonan said. Ireland’s debt peaked at 125% of GDP in 2013 as it completed a three-year international aid programme.

Between April and June, exports rose 5.4% quarter-on-quarter, the typically volatile investment spending grew 19.2% and personal consumption was up 0.4% to stand 2.8% higher year-on-year after retail sales rose at an even sharper pace in July.

“These GDP growth rates are exceptionally strong. However, they are not inconsistent with the rapid growth of goods exports, industrial production, retail sales, employment and tax revenues through 2015,” Conall Mac Coille, chief economist of Davy research group, said.

“The underlying picture is that the natural bounce-back in the economy has been accentuated by the weak euro stimulating exports and low oil prices and tax cuts helping real incomes.”