Irish economy enjoys solid recovery amid eurozone gloom

(DUBLIN) - Ireland's bailed-out economy grew by 1.6 percent in the second quarter, official data showed on Thursday, as Dublin outpaces other rescued eurozone countries with solid recovery following a property and debt crisis.

Irish gross domestic product (GDP) growth slowed from an upwardly-revised expansion of 1.9 percent in the first quarter of 2011 but has nevertheless managed to grow for two consecutive quarters for the first time in nearly five years.

The Central Statistics Office had originally estimated GDP growth of 1.3 percent in the first quarter, or between January and March. Expansion in the second quarter, or April-June period, was fuelled by strong exports growth.

The data points to a much stronger recovery for Ireland compared with fellow eurozone nations, including Greece and Portugal -- the two other countries along with Ireland that are being supported by EU-IMF debt rescue packages.

"Irish second quarter GDP figures revealed that the economy expanded strongly in the first half of 2011 and add to evidence that Ireland is in a much better position than Greece and Portugal," said Ben May, European economist at Capital Economics consultancy.

"But given the weak outlook for the global economy, its problems are far from over."

The Irish GDP figures include output generated by both domestic and foreign companies based in Ireland. Excluding the foreign contribution, Ireland's gross national product (GNP) grew by 1.1 percent in the second quarter, or between April and June.

This compared with a 3.0-percent contraction in the first quarter, although the January-March GNP data was better than the original official forecast of minus 4.3 percent.

GNP is regarded by the government as a more accurate barometer of the country's economic performance as it strips out substantial profits earned by multi-national companies in Ireland which are then taken out of the country.

Foreign companies backed by the government's Industrial Development Authority employ 139,000 Irish people and account for more than 75 percent of total Irish exports of goods and services.

The number of new companies setting up industries in Ireland rose by a fifth to 47 last year, while multi-nationals with operations in the country include Citigroup, Dell, Facebook, GlaxoSmithKline, Google, Intel and Microsoft.

Foreign companies are attracted to Ireland by its 12.5-percent rate of corporation tax, one of the lowest in Europe.

Ireland's once-proud 'Celtic Tiger' economy, famed for its double-digit growth for a decade from the mid-1990s, has contracted sharply in recent years, hit by a domestic property market meltdown and soaring unemployment.

Crippled by massive debts, the IMF and European Union last November mounted a rescue for Ireland worth 85 billion euros. Since then, fellow debt-laden eurozone nation Portugal has also been forced to seek an EU-IMF bailout, while Greece's rescue has been deemed insufficient.

In order to secure its own recovery, Ireland in March ordered a drastic overhaul of the its stricken banking sector, as the cost of rescuing its lenders was forecast to top 70 billion euros.