Estimates released today by the Irish Central Statistics Office for the second quarter of 2010 show a decrease of 1.2 per cent in GDP and a fall of 0.3 per cent in GNP compared with the previous quarter.
These figures signalled an unexpected end to previous signs of Irish recovery from the deepest recession of any eurozone country.
The Irish Republic officially moved out of recession in the first quarter of 2010 when GDP ( gross domestic product) grew by 2.7% compared to the previous quarter.
News of the relapse rattled the financial markets and investors warned that fears about Ireland’s ability to generate growth would push up the interest rates on its debt.
Most economists had predicted the Irish economy to grow by 0.5% in the second quarter – not shrink
Dan McLaughlin, Bank of Ireland’s chief economist. said “It is a disappointing figure clearly” he added that “One could take some comfort from the fact that domestic demand is beginning to show some signs of life,”
Interest rates on Ireland’s 10-year bonds have risen above 6.7% for the first time since the euro’s launch in 1999. Irish debt is trading 4.25 percentage points above equivalent German bonds, also a record during the euro era.