The economy has swung out of recession but growth remains weak.

Figures released by the Central Statistics Office (CSO) show the economy expanded by 0.4% in the three months to the end of June compared to a contraction in the first quarter of the year.

The increase was driven by higher exports and personal spending, which grew 0.7%. But compared to last year, the economy is continuing to shrink.

The figures will provide relief to the government with just weeks to go before another tough budget. However it is likely that it will have to lower its forecast for economic growth for the year as a whole.

There return to growth will add pressure to finance minister Michael Noonan to ease up on austerity. Under the bailout agreement with the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission, Ireland must cut €3.1 billion out of the economy to reduce the budget deficit.

The deficit must fall to 5.1% of the overall economy by the end of next year but with the economy growing again, there is scope for the October budget to come in below the €3.1 billion figure.

Michael Connolly is with CSO.