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"Patent cliff" saw Irish economy shrink by 0.3% last year

IBEC says that the figures are “puzzling”, but Michael Noonan isn’t worried.

Image: Eamonn Farrell/Photocall Ireland

THE IRISH ECONOMY shrank by 0.3% last year, as profits declined at a number of major pharmaceutical companies.

The latest CSO Quarterly National Account figures show that GDP fell by 0.3% last year, though these figures are preliminary and will be revised.

The so-called “patent cliff” is largely attributed to the fall, as a number of major pharmaceutical companies saw patents on big brands expire. On top of that, consumer spending dropped by 1.1%.

There was good news, however, for the agriculture, forestries and fishing, other services and construction sectors, with construction growing by 10.6%.

The distribution, transport, software and communications sectors fell by 2.5%, and public administration and defence by 4.6%.

The news comes despite a growth in the jobs market, something that employers group Ibec says is “puzzling”. Finance Minister Michael Noonan said that labour market indicators remain the priority.

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“By contrast, labour market conditions are encouraging. Employment data is a reliable indicator of underlying developments in the economy and figures released a fortnight ago show employment growth of 3.3 per cent year-on-year in the fourth quarter of 2013.”

Ibec’s Head of Policy and Chief Economist, Fergal O’Brien said:

“It is a bit of a puzzle that the GDP numbers are so disappointing at a time when economic recovery is clearly taking hold. The Q4 data doesn’t fit with either the 60,000 jobs growth number last year, or the strong improvement in business and consumer confidence. The pharma patent cliff is a significant factor in the export data, but it was particularly disappointing to see that the consumer spending numbers were so weak.”

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