Ireland’s return to recession dashes hopes

Hopes that Ireland’s economy was on the mend after the financial crisis were dashed yesterday with news that the country fell back into recession in the second half of last year.

Irish gross domestic product (GDP) shrank by 0.2 per cent in the final quarter of 2011, following a 1.1 per cent contraction in the third.

The news overshadowed the economy’s first annual expansion since 2007. GDP rose by 0.7 per cent in 2011 as a whole, ending three successive years of declines that saw the economy shrink by more than a tenth.

Gross national product (GNP) – a measure many economists prefer to use for Ireland because it excludes the exported profits of multinational companies – fell by a much sharper 2.2 per cent in the final quarter. That followed a GNP fall of 1.9 per cent in the third quarter, suggesting a much harsher experience than the headline figure implies.