Friday, July 2, 2010

The Ireland recession may not be over

It was just a year ago that Ireland was in recession and losing a job every five minutes. The Wall Street Journal must think that Ireland has had enough, because they’re reporting the nation’s 2.7 percent GDP growth in exports for Q1 2010 is the sign that they’ve officially exited the recession. However, Ireland’s road to economic recovery remains long. Ireland lost 14 percent in GDP figures from 2008 to 2010, placing them squarely among the worst off euro zone nations during the global recession. Prime Minister Brian Cowen is urging Ireland to be prepared for hard times for the next 10 to 15 years.

Source for this article: Has Ireland exited the recession? A quick fix seems unlikely by Personal Money Store

Investors’ role in Ireland and also the recession

Sky-high benchmark bonds are keeping Ireland in the recession, reports the New York Times. Investors are downcast and guaranteed loan borrowing continues to fly, both of which has made things tough for the Dublin brain trust. Ireland’s primary goal is to restore investor confidence through deficit reduction, but higher taxes, lower salaries for public workers and the fallout of the burst housing bubble – including an uptick in the origination of low cost loans – have made it difficult for Ireland’s population to wait patiently.

Relying heavily on exports

Ireland attracted companies like Intel, Microsoft, Facebook and LinkedIn to address previous recessionary woes, but this time, the Irish government is depending upon an export revival, according to the Times. The Times reports that lower public pay and decreasing energy costs are on Ireland’s side within the economic recovery, but lack of jobs within the export market and also the falling euro cast a considerable shadow. Wage cuts are making Irish graduates think twice about staying home. Irish college grads do not want to wait 10 to 15 years for instant money.

Cowen worried about 2012

The long, hard road to economic recovery via tough deficit reduction might be the only way that Ireland will escape recession. But it will likely not happen fast enough for Irish voters in the next election. Prime Minister Cowen has promised that the already slashed public salaries won’t go lower, but that might be a case of too little, too late. Irish voters might not be able to wait any longer.

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