Having expanded at an average annual rate of 8.5% in the 1993-2000 period, the Republic of Ireland experienced a sharp deceleration in the rate of economic growth over the course of 2001. Although GDP growth averaged 5.7% for the year as a whole, the rate growth slowed from 11.3% (year-on-year) in Q1 to just 1.1% by Q4.
The main reason was the weaker global environment, in particular the downturn experienced by the IT sector, which accounts for about 13% of total Irish GDP. Other factors included a deceleration in the pace of foreign direct investment, which is estimated to have fallen by 60% year-on-year in 2001, a decline in competitiveness due to tighter labour market conditions, a correction in the housing market and a fall off in tourism flows due to geopolitical factors and the foot and mouth crisis.
