From its peak at the back end of 2007, the Irish economy sank like a stone for two solid years, seasonally-adjusted quarterly GDP falling 10.7% in real terms. Ever since, it has seemed alternately to be sinking more slowly or rising gradually. In reality, for two and a half years it has been treading water beneath the surface.
Between the first three months and the second three months of 2012, estimated GDP was within a rounding error of zero growth, avoiding a technical recession – two quarters of successive GDP contraction – by less than one euro for every person in the country. In the 10 quarters since end 2009, GDP has increased just 2.6%, barely keeping pace with population growth. The unemployment rate remains stranded at 14.8%.
The domestic economy is starved of the oxygen it needs to grow: consumers are overburdened with debt; businesses are either afraid to invest because of weak demand or unable to invest due to lack of credit; government is reinforcing the problem through ongoing, enforced austerity. The one bright light is Ireland’s continuing strong export performance, even in the face of a challenging external environment. Continue reading →
As silly season gives way to budget season, Irish citizens and politicians alike are confronted with the depressing reality that not much has changed since they last checked: the economy is flatlined, unemployment remains stubbornly high, and the government is still borrowing more than a billion euro per month.
When Francois Hollande was elected President of France in May, a Gallic counterweight to German intransigence promised an alternative to austerity in Europe. Growth seemed to be very much on the agenda.
This spring-time optimism has given way to the cold, hard reality of Autumn. Measures to stimulate economic growth have been welcome, but in short supply. The Eurozone economy is mired in recession. Europe’s core and periphery alike will get little respite from the painful process of reducing budget deficits, even as economies shrink. More than ever, the growth agenda needs to be front and centre. Continue reading →
For going on two years, the Eurozone policy response has seemed to be stuck in traffic. Mario Draghi’s mid-summer pledge to do ‘whatever it takes’ to save the euro raised expectations that a decisive moment was at hand. Last week, it looks like he delivered.
If Eurozone policymakers are no longer ‘stuck in traffic’, then one must wonder whether the junction at which they now find themselves is a crossroads or a roundabout. Is the Eurozone on the verge of turning a corner, or is this one more spin on the merry-go-round? Continue reading →