Ireland on Sept. 25 became the first eurozone member to fall into a recession since the U.S. subprime home loan crisis sparked a global economic slowdown, official data showed. Ireland's economy, rocked by a domestic property market meltdown, entered recession for the first time in 25 years after shrinking in the second quarter of 2008, the Central Statistics Office (CSO) said.
"Ireland is definitively in recession: the first euro area country to be so," said Barclays Capital analyst Julian Callow. Irish gross domestic product (GDP) shrank 0.5% in the second quarter of 2008 compared with the previous three-month period when the economy contracted 0.3%, according to the CSO.
Ireland has in recent years been described by analysts as the "Celtic Tiger" economy because of its prolonged period of double-digit growth in the 1990s, which placed it among the richest nations in Europe. However, it has been hammered by the international credit crisis, a severe property and construction industry downturn, weak consumer spending, sky-high oil prices and the strong euro.
The CSO said that Ireland's economy also contracted on a 12-month basis in both the first and second quarters of 2008. "In the second quarter of 2008, GDP decreased by 0.8% at constant prices compared with the same period in 2007," the CSO. "This is the second successive quarter in which GDP showed a decrease compared with the same quarter of the previous year." The economic growth rate had plummeted to minus 1.3 % in the first quarter of 2008 on a 12-month basis, the CSO added -- a slight revision from the previous estimate of minus 1.5%.
European neighbors Britain, France, Germany, Italy and Spain sit on the brink of recession amid global economic turmoil. Denmark, which is not in the eurozone, fell into recession -- two successive quarters of negative growth -- earlier this year.
"We expect that Italy and quite possibly Germany will also record contractions in their third-quarter GDP, following contractions in the second quarter -- with a substantial risk that France does as well -- so Ireland is unlikely to be alone in entering the euro area 'recession club,' Callow said.
Key U.S. companies with bases in Ireland include hi-tech giants Apple, Dell, Google and Microsoft.
Copyright Agence France-Presse, 2008