The Associated Press March 25, 2010, 11:50AM ET

Ireland's economy suffered record slump in 2009

Ireland's recession-battered economy in 2009 suffered its greatest declines since record-keeping began, the Central Statistics Office reported Thursday.

Gross national product, or GNP, fell 11.3 percent from January to December. Gross domestic product or GDP -- which includes still-growing profits shipped out of Ireland by foreign-owned companies -- fell 7.1 percent.

Both figures shattered all previous economic falls in Irish records dating back to 1947. The previous worst marks for economic shrinkage were set in 2008, when GNP fell 2.8 percent and GDP 3.0 percent.

Finance Minister Brian Lenihan sought to put a positive spin on the wretched figures, noting that the government's own forecast had envisioned an even worse 7.5 percent drop in 2009 GDP.

Paradoxically the foreign-owned businesses in Ireland -- chiefly U.S. technology companies concentrated on computers, software and drugs -- recorded higher earnings in 2009. They exported nearly euro32 billion in net income back to their home countries, up 17 percent from 2008 and a new record high.

Lenihan predicted that Ireland -- which is slashing billions from overall spending even as it funds a massive bank-bailout project -- would return to growth in the second half of 2010. Most economists agreed.

Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin, forecast Irish GDP would fall 0.8 percent overall in 2010 but would turn positive by the fourth quarter and return to 3.0 percent growth in 2011.

But opposition politicians noted that GNP and GDP both fell by a sharper-than-expected 2.3 percent in October-December 2009. They said the recession was actually deepening as consumers and domestic businesses spend less and less.

Richard Bruton, finance spokesman of the opposition Fine Gael party, said the fourth-quarter retraction suggested "an economy caught in a vice-like grip where the private sector is saving furiously to pay down its debts." And he said Ireland's plans to keep budget-cutting for four more years would prolong the recession.

"Next year Minister Lenihan is promising a further euro2 billion worth of cuts in investment and tax hikes. This will make the chance of recovery even more difficult," Bruton said.

Ireland is struggling to contain a runaway deficit currently exceeding 12 percent of GDP but already faces rising strike action from unionized public workers who want to reverse recent income-tax increases.

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On the Net:

Ireland's 2009 accounts, http://tinyurl.com/3e5w9a


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