* Retail sales, property prices stabilising after grim Q1
* Recession a blow to bailout exit, European austerity
* Lack of household credit highlight economy's fragility
By Padraic Halpin
DUBLIN, June 28 Irish retail sales and property
prices showed signs of stabilisation last month, with data on
Friday suggesting the economy may have performed better in the
second quarter after falling back into recession.
The economy unexpectedly slid into recession late last year
and continued to contract in the first quarter, according to
data this week that dented European hopes that Dublin would show
some rewards for its tough austerity policies.
Retail sales, which fell sharply in the first quarter after
two successive quarters of growth, grew month-on-month for the
second month in a row in May, albeit at just 0.1 percent and
consumers remained more reluctant to part with their cash than
they were a year ago.
House prices also grew again after a poor start to the year
and the data followed figures earlier this month that showed
Irish goods exports returned to annual growth in April after
collapsing in the first quarter.
"Today's figures point to Q2 being a bit better," said KBC
Ireland economist Austin Hughes, who trimmed his growth forecast
for this year to 0.7 percent from 1 percent after Thursday's
grim data showing Ireland was in recession.
"The economy didn't collapse of late, it is still struggling
forward. The numbers we're seeing are consistent with an economy
that may be struggling to build momentum but is probably still
marginally moving forwards rather than backwards."
Ireland is still likely to exit an EU/IMF bailout at the end
of the year, having met nearly all its funding needs through
2014 with a limited return to debt markets, but the government's
boasts about a resilient economy have taken a battering.
While a slowdown among Ireland's trading partners has been
evident in export figures since late last year, new data has
shown that consumer spending between January and March recorded
its worst quarterly fall since records began in 1997.
The government, which is targeting economic growth of 1.3
percent this year, had predicted that consumer spending would
increase in 2013. It revised up its forecast for the domestic
economy in April on the back of stabilising house prices and an
unemployment rate at its lowest level in three years.
That forecast now looks unrealistic even if there is a
general improvement in the second quarter, and central bank data
on Friday - showing lending to Irish households fell at its
sharpest rate since 2010 - highlighted just how fragile the
The poor growth figures have re-ignited a debate over
cost-cutting in Ireland as the government prepares for its
seventh austerity budget in five years in October, a 3.1 billion
euro package of a similar order to this year's dose of cuts and
"Ireland's policy of austerity is exactly like bloodletting,
and history will recognise it is just as barbaric," Stephen
Kinsella, an economics lecturer at University of Limerick, wrote
in a newspaper column.