The Irish economy grew by 1.6pc in the second quarter compared with the previous one, new figures from the Central Statistics Office show. And the Gross Domestic Product (GDP) growth, which includes the value of goods produced by multinationals, is the highest since the last quarter of 2007.
Excluding multinationals, Gross National Product grew by 1.1pc.
On an annual basis, GDP growth was 2.3pc and GNP 1.1pc.
Finance Minister Michael Noonan said the figures clearly showed a recovery is underway, despite the slowdown in the world economy.“The increase in activity is being led by the exporting sectors of the economy,” he said.
“This, in no small part, reflects the significant improvement in competitiveness that has taken place in recent years and is testament to the flexibility of our economy.”
However, he also warned that there are a lot of uncertainties because as a small, export led economy, Ireland is particularly susceptible to slowdowns or improvements in other countries. “As we saw yesterday, the International Monetary Fund has revised down its global growth projections for this year and next,” he added. “Updated forecasts for the period 2011-15, will be published by the Department of Finance in the pre-budget outlook in October and these will take account of the latest domestic and international data.”
The Government still needs to take between €3.6bn and €4bn out of the economy in December’s budget.
Economists were also upbeat and highlighted that growth is far outweighing countries like Germany and France, where these economies are effectively static.
"Following a seasonally-adjusted quarterly increase of 1.9pc in the January-March period, GDP posted another strong quarterly rise of 1.6pc between April and June,” said Alan McQuaid, chief economist at Bloxham Stockbrokers.
Indeed, of the Euroland countries, only the new ‘kid on the block’, Estonia, outperformed Ireland in the quarter.
“Meanwhile, GNP was up 1.1pc in the quarter compared with a fall of 3pc in the opening three months of the year.” Net exports grew by €1.9bn or 23pc between the second quarter of 2010 and the second quarter of 2011. But domestic demand, which is reflected in weak consumer spending, dropped by €714m over the same period.
While this figure is lower, there are also indications that domestic demand may have stabilised between April and June. On a seasonally adjusted basis, consumer spending increased by 0.3pc compared with the first three months of this year, while investment rose by 6.4pc.