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Ireland enters recession

Latest update : 2008-09-25

Ireland has entered a recession, its economy having shrunk in the first two quarters of 2008, 0.3% in the first quarter and 0.05% in the second.

Ireland's economy, hit by a housing market collapse and the global credit crunch, has entered a recession after shrinking in the second quarter of 2008, official data showed Thursday.

European neighbours Britain, France, Germany, Italy and Spain sit on the brink of recession amid persistent global economic turmoil.

Denmark fell into recession -- two successive quarters of negative economic growth -- earlier this year.

Irish gross domestic product (GDP) shrank by 0.5 percent in the second quarter of 2008, compared with the previous three-month period, the Central Statistics Office (CSO) said in a statement.

That followed contraction of 0.3 percent in the first quarter.

Ireland has in recent years been described by analysts as the "Celtic Tiger" economy because of its prolonged period of double-digit growth in the 1990s, which placed it among the richest nations in Europe.

However the eurozone member has been hammered by the international credit crisis, a severe property market and construction industry downturn, weak consumer spending, sky-high oil prices and the strong euro, according to economists.

Howard Archer, an analyst with the Global Insight consultancy in London, said it was not a shock that Ireland had lost its roar.

"It was no surprise that Ireland contracted again in the second quarter as a wide range of indicators had been extremely weak -- be it relating to the service sector, manufacturing, consumer confidence and retail sales," Archer told AFP.

"Clearly, the housing market and construction downturns are having a major depressing impact on Irish economic activity on top of wider European problems including the strong euro, elevated oil, commodity and food prices, the financial sector turmoil and slowing global growth."

He added: "I think the downturn has been more severe in Ireland than in other European countries, but I think an increasing number will join Ireland in recession, including the UK, Spain and Italy.

"Technical recession is also very possible in both Germany and France," said Archer.

The CSO added Thursday that Ireland's economy also contracted on a 12-month basis in both the first and second quarters of 2008.

"In the second quarter of 2008 GDP decreased by 0.8 percent at constant prices compared with the same period in 2007," the CSO said in its statement.

"This is the second successive quarter in which GDP showed a decrease compared with the same quarter of the previous year."

The economic growth rate had plummeted to minus 1.3 percent in the first quarter of 2008 on a 12-month basis, the CSO added. That marked a slight revision from the previous estimate of minus 1.5 percent.

Date created : 2008-09-25

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