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Moderate slowdown balances growing unemployment

February 16, 2011

By Staff Reporter

DUBLIN — There was good news and bad news on Ireland’s economic front last week.

The good news is that new data suggest a more moderate slowdown in the economy that experts had been predicting. The bad news is that unemployment in Ireland grew for the first time in five year even before the Sept. 11 terror attacks in the U.S.

Figures released Wednesday by the Central Statistics Office show that the Irish economy continued to grow in the second quarter of 2001. The Quarterly National Accounts show that Gross Domestic Product grew by 9.2 percent in the second quarter, compared to the same period last year. GDP is the value in monetary terms of the goods and services produced in the country. It is considered a more accurate indicator of quarterly growth than Gross National Product, which is GDP less outflows from the economy such as profits repatriated by foreign-owned multinationals.

GNP is a more reliable indicator of long-term growth but can sometimes give a confusing picture on a quarterly basis. This was the case in the second quarter, according to the Central Statistics Office, when GNP grew by only 1.6 percent over the previous year. Economists attributed the surprisingly low figure to a technical difference in the timing of profit repatriation between this year and last year.

GNP growth in the second quarter of 2000 was extraordinarily high because multinationals did not remit money to their parents. The opposite appears to have happened in the second quarter of this year, resulting in the anomalous figure released by the CSO.

Commentators chose to focus on the relatively healthy GDP figure as indicating the economy still had considerable momentum going into the second half of the year. Even allowing for the exceptionally low figure in the second quarter, GNP still grew by 6.1 per cent in the first six months of the year, according to Eunan King, an economist with NCB Stockbrokers.

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King expects the figure for the nine months to the end of September to be 7 percent and the full year out turn to be near that level. “We will be revising our full-year forecast up from 6.8 percent,” he said.

Meanwhile, unemployment grew for the first time in five years, the CSO has said.

The latest Quarterly National Household Survey showed that there were 79,500 people unemployed in the June-through-August quarter, a rise of 1,800 on the corresponding quarter of 2000. It was the first annual rise in the number of unemployed since April 1996. The second quarter of 2001 showed an annual decline of 9,500.

The number of unemployed rose by 14,100 between the second and third quarters. While unemployment tends to rise in the summer months due to seasonal factors, the quarterly rise was substantially larger than the increases of 4,200 and 2,800 recorded between the second and third quarters of 1999 and 2000, respectively, according to the CSO.

Almost all of the quarterly rise was accounted for by the rise in the number of unemployed persons under the age of 25. The unemployment rate was 4.3 percent in the third quarter of 2001, compared with 3.7 percent in the previous quarter and 4.3 per cent in the corresponding quarter of 2000.

The survey was completed too early to have been affected by the events of Sept. 11, while the more recent job-loss announcements will not be officially recorded until the release of fourth-quarter data by the CSO in February.

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