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| Irish economic commentary |
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After Ireland’s remarkable growth performance in the past ten years, current forecasts for the contraction in the size of the Irish economy for 2009 have repeatedly been revised downwards in the past 9 months as the outlook, both internationally and domestically, deteriorates further and forecasts now predict a contraction of 9% in 2009 or 13.5%(1) over the three years cumulatively from 2008-2010. The drop in output has coincided with a sharp fall in the labour market, with unemployment forecast to reach 17% by the end of next year(3). The speed of decline has slowed somewhat in the second quarter of the year with the biggest declines in both output and employment seen in the first few months of 2009. However, the economy is still contracting and to address the situation, the Irish Government has taken some important steps including tax measures to deal with the public finances, alongside the establishment of NAMA to return stability to the banking sector. However, tough decisions lie ahead, including the 2010 Budget in December this year to reduce the significant gap between revenues and expenditure down to a manageable level as it is estimated that a spending adjustment of approximately 9.5%(1) of GDP will be required on the expenditure side. Until this time, the outlook for the Irish economy remains negative.
(1) Source: International Monetary Fund: Ireland Staff Report for the 2009 Article IV Consultation
(2) Source: ESRI, Quarterly Economic Commentary, Spring 2009 |
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