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Recovery in Ireland 'flat' as exports lead the way

Tourism and shopping could rescue the Irish economy from crisis as official figures showed home-grown companies once again hit by a dramatic slump.

While the overall economy grew 1.3% at the start of the year the domestic sector collapsed 4.3% prompting Finance Minister Michael Noonan to call for a consumer spending splurge.

"The focus was on the tourist industry and of course what we really need is for people to go into the shops and start buying again," he said.

"If that starts, with tourists visiting our shores stimulating the retail side, and is followed by our own ordinary citizens going about their shopping and beginning to spend again, then we begin to lift out of the crisis."

Despite the three-month slump in gross national product, overall growth, measured by gross domestic product and including the huge multinational sector, is the biggest quarterly boost for the economy since the end of 2007.

According to official revisions by the Central Statistics Office (CSO) for last year, the overall economy contracted by 0.4% but the Irish-owned sector grew by 0.3%.

Preliminary CSO estimates in March warned it shrank by 1% but it is still the second worst performance in the euro zone after Greece.

Mr Noonan said the figures were encouraging and dismissed suggestions the domestic economy was in freefall.

"The country has experienced three years of continuing decline in GDP - quite a big chunk of activity has been taken out of the economy," he said.

"We always said that the initial growth would be export-led and that's happening now."

He added: "It's not in freefall. It's flat at the minute. We will see what happens after the jobs initiative. These are figures for the first quarter, it will be interesting to see what happens between September to Christmas."

The Government has adopted ideas to drive tourism such as cuts to VAT and employers' levies on wages. They are expected to bear fruit as the summer wears on.

Mr Noonan added: "Our external partners in Europe and the IMF- they have begun to say in the last few weeks 'Ireland is not Greece, the economy in Ireland is totally different, it's a different model and it's doing quite well'."