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Finance Minister Michael Noonan says he is now looking at a fiscally neutral Budget next month Irish economy records second successive quarter of strong growth, with GDP coming in at 1.5%
Finance Minister Michael Noonan has said the economy may grow by as much as 4.5% this year.
The minister made his comments after the CSO estimated that the economy grew by 1.5% in the second quarter of this year – the second successive quarter of strong growth.
Ireland is now recording the strongest economic growth in the European Union.
Mr Noonan said instant estimates by his officials suggested a much stronger growth level than previously estimated by the department.
He said the key budget target of getting the deficit below 3% of GDP next year could now be hit without further spending cuts or tax rises.
Mr Noonan said he was now looking at a fiscally neutral Budget next month, with changes intended to boost employment levels and support continued further growth in the economy.
But he said it would not be a giveaway Budget, as the country still faced an enormous debt burden.
Last week, the minister revised the growth estimate up to 3%. The last official estimate was published in April and was for growth of 2.4%.
Mr Noonan also said the very strong growth meant that the budget deficit would come in well below 4% of GDP, and he thought it could be as low as 3.5%.
Given the outlook for economic growth averaging 3% a year for the next five years, all budget targets can be met, he added.
Today’s preliminary Quarterly National Accounts data from the Central Statistics shows GDP growth of 1.5% and GNP growth of 0.6%.
Industrial output, including construction, increased in volume terms by 4.7% between the first and second quarters. Distribution, transport software and communication output increased by 2.9%.
Construction GDP increased by 6.2%, while industry grew by 5.3% and agriculture grew by 3.9%.
Industrial growth was broad based, with both the multinational sector and the so-called “traditional” sector recording growth.
In the last two quarters, both domestic demand and net exports contributed to GDP growth, and according to the CSO, this is something that has not been seen for quite some time.
Capital formation (or investment) is up 9.1% in the second quarter.
Of this, construction recorded growth of 7% while other capital investment grew by 8.5%.
Domestic demand grew by 1.1% and net exports grew by 7.2%.
Year-on-year, the GDP growth rate is 7.7%, while GNP recorded growth of 9% compared to the same quarter in 2013.
Today’s CSO figures show that year-on-year growth rates for other sectors include Industry, up 6.3%; distribution transport, software and communications up by 11.3%; other services grew by 2.7% and building and construction rose by 9.1%.
Personal consumption grew by 1.8% compared with a year ago, while investment was up 18.5% and net exports were 17.4% ahead compared with the second quarter of last year.
Net factor outflows – profits flowing to foreign multinationals – increased by €152m or 9% year-on-year.
Output from other services fell by 0.8%, while public administration fell 0.5%.