* Grows 1.5 pct q/q in Q3, easily beats forecasts
* Shows recovery gaining momentum
* Construction, investment surge, exports dip
By Padraic Halpin and Conor Humphries
DUBLIN, Dec 19 Ireland's economy grew more than
twice as fast as expected in the third quarter, thanks to
buoyant construction and investment, putting it on a sounder
footing as it emerges from an international bailout.
After becoming the first euro zone member to complete its
rescue programme last week, Ireland is counting on a lift in
construction and consumer spending to spur on its tentative
recovery next year.
Gross domestic product expanded 1.5 percent quarter on
quarter, data showed on Thursday, more than double analysts
forecasts for 0.7 percent and the fastest quarterly growth since
the second quarter of 2011.
The economy has now expanded for two successive quarters
after struggling for the previous 18 months. While it still
faces challenges, including heavy household debt and high
unemployment after a five-year property crash, the jobless rate
has dropped to 12.5 percent from last year's 15.1 percent peak
and property prices in Dublin at least have started to pick up.
"This certainly suggests that there is a good bit of
momentum in the economy and that the consumer is slowly coming
back," said Conall Mac Coille, chief economist at Davy
"Construction spending is up 15 percent on the year which is
an extraordinarily large rate of expansion."
While construction is building off a low base after the
property crash devastated the economy, there was an equally
eye-catching rise in investment, which jumped 11 percent
compared to the previous quarter.
Consumer spending, which accounts for half of economic
activity, was up 0.9 percent quarter on quarter, rising for a
second quarter in a row following a sharp contraction earlier
this year as households continued to suffer under the weight of
debt and austerity measures that were a condition of the
The rise in consumption helped compensate for a 0.8 percent
quarterly dip in exports.
After a slow start to the year, economists said Thursday's
data suggested the government will meet or slightly better its
overall growth target of 0.2 percent for this year and that its
2 percent forecast for 2014 should be attainable.
"They're encouraging numbers pointing towards relatively
modest growth this year but you should see a stronger recovery
take hold through next year," said Austin Hughes, chief
economist at KBC Bank Ireland.
"The momentum that's building in domestic demand, in
investment is pointing towards 2 percent growth looking a
reasonable outcome for next year."
Ireland needs annual growth of between 2 and 3 percent to
take hold from next year if it is to achieve a target to cut
debt - set to peak above 120 percent of GDP this year - by a
quarter by the end of the decade.
The government is placing construction at the heart of its
economic strategy and in its recent budget for 2014 announced
tax breaks for the industry - even though the sector defined the
"Celtic Tiger" boom and bust.
Thursday's data showed that the economy grew by 1.7 percent
in the third quarter from a year earlier, well above forecasts
for 0.5 percent growth. Second-quarter growth was revised up to
1 percent quarter-on-quarter, more than double the initial
The government is also hoping that its decision to bring in
a less stringent budget for next year will improve consumer
confidence. Finance Minister Michael Noonan told Reuters this
week he hopes the more positive outlook will allow him to ease
back on austerity again next year.