Irish retail sales fell 9.9 percent in June, the smallest drop this year, indicating a rare glimmer of hope for one of the worst performing economies in the industrialised world. Retailers are cutting prices to tempt nervous consumers through their doors, reflected in an 0.8 percent fall in Ireland's consumer price index (CPI) in July to stand 5.9 percent lower than a year earlier, separate data showed on Thursday.
Some economists said the slowing rate of deterioration in retail figures, which rose 2.2 percent month on month, set the stage for an upgrade to economic output forecasts for this year. "I think we've clearly turned a corner," said Brian Devine, economist at NCB Stockbrokers which moved its GDP estimates for the year to a contraction of 7.6 percent from 8.1 percent previously and brought the 2010 figure in to -2.0 percent from -3.1 percent.
"We've seen industrial production hold up pretty well, exports have held up extremely well and now we are seeing a bit of stabilisation in the retails sales - which you expect to be the weakest component because of an increase in unemployment and tax increases - so I do think it's time to upgrade Irish GDP at this point."
Economists, who expect retail sales to fall 13 percent and CPI by 4 percent this year, have forecast a record 8.45 percent decline in Gross Domestic Product for 2009 according to the latest Reuters poll. Elsewhere, Germany and France achieved a shock return to economic growth in the second quarter of the year on Thursday, ending their recessions earlier than many policymakers and economists expected.
Dermot O'Leary, chief economist at the Goodbody brokerage, said he would not change his GDP estimates of -8.6 percent for 2009 and -4.5 percent for 2010 on the basis of one indicator but that the retail figures would have implications for 2010. "One month does not make a trend but we're quite encouraged that from a consumer perspective, there doesn't seem to be any sign of a budget hangover since the tax change that came in and would have come into people's pay packets in May," he said.
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