Ireland's economy sank back into recession in late 2011 despite recovering to show its first annual growth for four years, mixed official data showed on Thursday.
Irish gross domestic product (GDP) shrank 0.2 percent in the fourth quarter after a contraction of 1.1 percent in the third quarter, the Central Statistics Office (CSO) said in a statement.
The technical definition of a recession is two quarters of economic contraction in a row.
Ireland has based its strategy to overcome a debt mountain, with the help of a second bailout, on export-led growth and is expanding exports in some sectors sharply.
But the return to recession shows the limits of relying on strong exports to drive growth which has been undermined by slowing activity in eurozone countries owing to uncertainty caused by the now easing debt crisis.
"The outlook looks challenging given the country's strong reliance on external demand," said Sonia Pangusion, an economist at consultants IHS Global Insight.
"The eurozone crisis started to intensify by day during the second half of 2011, hurting global growth prospects. Today's figures confirmed that Ireland definitely felt the pinch," she added.
Ireland's fourth-quarter net exports meanwhile were not enough to keep growth going, for the first time since the start of 2010.
At the same time, domestic demand remains subdued, partly because of ongoing state austerity measures and lower government expenditure.
Thursday's GDP figures included output generated by both domestic and foreign companies based in Ireland.
Excluding the contribution from exports, Ireland's gross national product (GNP) shrank by 2.2 percent in the fourth quarter after a 1.9-percent decline in the previous three months.
GNP is regarded by the Irish 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.
In a mixed batch of data, the CSO also revealed on Thursday that the Irish economy returned to annual growth last year following its vast international bailout in 2010.
"Preliminary estimates indicate that GDP in volume terms increased by 0.7 percent for the year 2011. This follows three successive annual decreases in GDP during the years 2008 to 2010," the CSO said.
However the economy shrank by 2.5 percent last year in GNP terms.
Ireland's once-proud 'Celtic Tiger' economy, famed for its double-digit growth for a decade from the mid-1990s, had contracted sharply in recent years, hit by soaring state debt, a property market meltdown and surging unemployment.
In November 2010, the International Monetary Fund and the European Union mounted a rescue for Ireland worth 85 billion euros as the nation was crippled by massive sovereign debts.
Since then, fellow debt-laden eurozone nation Portugal has also been forced to seek an EU-IMF bailout, while Greece has received two massive international rescue packages.
Source: http://news.yahoo.com/ireland-officially-back-recession-data-000718382.html
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