Michael McGrath (Cork South Central, Fianna Fail)
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Question 135: To ask the Minister for Finance if he is concerned by the contraction in GNP over the past three quarters; the implications of this trend for employment and future taxation revenue; and if he will make a statement on the matter. [36796/12]

Michael Noonan (Limerick City, Fine Gael)
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I note the Deputy's concerns regarding the recent contraction in GNP. As has been well documented, Ireland's economic recovery will be export led. This is how growth in a small open economy such as Ireland's should be driven and we are once again seeing evidence of that, with exports growing by over 5 per cent in 2011 and by 6.1 per cent in the first three months of 2012. Indeed, recently the CSO released a revised growth forecast for 2011 which saw real GDP expand by 1.4 per cent. While the economy is growing again, it will take time for export growth to feed through to the labour market and the domestic economy. Moreover, it will take households and firms time to work through the imbalances which had built up during the boom. The Government is acutely aware of the headwinds which the domestic economy faces in this regard. We have therefore taken a number of steps to support domestic activity and job creation, including the introduction of the Jobs Initiative shortly after coming into office and the structuring of Budget 2012 in such a way as to be as growth-friendly as possible. Indeed, there is some evidence of stabilisation in the labour market with the number of private sector jobs increasing by 13,500 year-on-year in Q1 2012.

Furthermore, the stimulus announced on the 17th of July will help to sustain jobs in the construction sector which has been very badly hit during the recession. The investment in this Phase 1 package is expected to generate significant numbers of jobs: previous analysis of each sector indicates that the investment will generate around 13,000 jobs. It will also create much needed social and economic infrastructure and aid economic recovery.

In relation to taxation, the latest Exchequer Returns for the period to end-June show that tax revenues are performing well, increasing significantly year-on-year and over €1⁄2 billion or 3.1 per cent ahead of target. This is an encouraging performance in the circumstances and while it must be acknowledged that there are large tax revenues targets to meet in the second half of the year, I am confident at this point that our overall tax revenue target for the year will be achieved.