July 1, 2008 | posted by Michael Baxter in Eurozone |

Well, we won’t know for sure for several months.  But, according to the latest official data, the Irish economy contracted by 0.2 per cent in the first quarter of this year, and annual rate of growth fell from plus 5.5 per cent to minus 1.5 per cent.

With the Irish housing market collapsing faster than in the UK, construction output fell by almost 9 per cent.

According to Capital Economics: “There are very good reasons to believe that the worst is far from over. After all, the property downturn is still in full swing, with house prices now having fallen in each of the last 15 months. Prices are down by around 12 per cent from their peak and look set to drop considerably further. We have previously estimated that they will fall by 20%, but this is starting to look like a conservative estimate. Needless to say, this points to further sharp falls in construction output and investment.”

Jonathan Loynes, Chief European Economist, said: “All-in-all then, it seems clear that the Irish party is well and truly over and that the hangover is finally kicking in. It now looks like the economy will barely grow at all on average in 2008 and there is a very strong chance of an outright recession.”